See what happened to some past Powerball winners who didn’t seek the guidance of a financial advisor to help them manage their Powerball jackpots.
We’re often sharing Powerball winner advice and best practices for stretching every dollar in your jackpot prize. And one of the most common suggestions is to seek the guidance of a professional for managing your newfound cash flow. A financial planner or wealth manager is a great resource for smart investing, spending, and gifting. And here are some examples of what can happen if you do win and choose to manage money matters on your own. These cautionary tales only reaffirm the value of professional assistance with your Powerball jackpot winnings.
1. The Couple That Splurged Away Their Winnings
One jackpot-winning couple had only $24 in their bank account when they discovered they’d won a whopping $13 million. And the pair thought they’d play it smart by choosing the annual installments instead of the lump sum. Their yearly stipend came out to be $666,666, which they later said should have been a sign of bad things to come. The couple wasted no time blowing through their winnings, taking three-month Las Vegas trips renting $1,000 per night penthouses. Gambling and frivolous spending tanked the couple’s cash flow.
2. Not Hiring an Accountant Proved Costly in Taxes
This same couple also neglected to hire an accounting professional. And without a pro helping them manage their cash flow and tax burdens, they got behind. Fast-forward a decade from the date of their big win, and the couple owed the IRS $2.5 million in unpaid taxes and eventually dealt with tax fraud charges.
3. Within a Matter of Years, Bankruptcy Ensued
Never mind the obsessive spending and tax violations, other Powerball winners had even more problems. Gambling, luxury vacations, and expensive cars, without financial planner guidance, can lead to bankruptcy. There are more than a few jackpot-winning stories that followed the rags-to-riches-to-rags roller coaster. Within a matter of a few years of becoming multi-millionaires, one married couple filed for bankruptcy. And sources say they lived in squalid conditions, with their only source of electricity running through an extension cord rigged to their car.
4. Invest It - Don't Carry It Around
Another Powerball winner, who thought he could handle his own finances, learned the hard way. A financial planner would have advised him not to carry $12,000 in cash with him in his fancy sports car. And common sense should have told him not to be out partying at night with that much "expensive" visibility. He was held at gunpoint and robbed of his cash, but he was lucky enough to walk away with his life. There are better ways to have your money at your fingertips than wads of cash. And a financial advisor can help you with more discrete resources and ways to enjoy yourself without making yourself a target.
5. Choosing the Wrong Advisor
Another Powerball winner let her grandson help her choose a financial advisor. It turns out that the advisor wasn't actually versed in wealth management. And the grandson had to go to court when Grandma felt she was being swindled by both of them. This cautionary tale makes the point that not all "advisors" are going to have the expertise you need to make smart Powerball jackpot investment decisions. So, do your homework before partnering with anyone. And don't let a family member handle the vetting for you.
Learn from the mistakes of past Powerball winners. Should you find yourself in possession of a massive, jackpot-winning ticket, make your first call to a wealth professional for advice. Think rationally about how best to handle, invest, and spend your newfound prize money. Project your plans for long-term results. And ask questions and get the support you need to make those millions of dollars last and benefit you in the most productive way possible.