With the lottery becoming the new American Dream rather than a lifetime of hard work, there is an amazing development taking place in the world of lotteries. Two different lotteries have yet to produce a winner of the major jackpots. The Mega Millions lottery did not generate a winner, nor has the Powerball lottery. With Mega Millions now rolling up to $390 million and with the Powerball now at $222 million, this now puts the week of June 30 with a whopping $612 million up for grabs by the millions of people who play the lottery each week.

The odds should have generated a major winner in each lottery by now. What is amazing is that the $612 million combined would not represent a record lottery even if it was combined. It is just highly unusual for these to both be rolling up to such high sums simultaneously.

Lottery players know that the cash option is lower. The annuity value of $390 million for the Mega Millions would be $265 million for the cash option, while the annuity value of $222 million would be just over $151 million for the cash value.

Whether lottery winners take the annuity or the cash option, either one of these lotteries can create multi-generational wealth. What lottery winners have to understand is that sudden extreme wealth brings the need for sudden extreme responsibility. This is why 24/7 Wall St. has created the 12 Things Not To Do If You Win The Lottery.

Can you imagine winning a sum of over $100 million over $200 million? Even after you back out the discounts, the maximum tax rates for a state and the IRS, and even after backing out settling up your old life’s obligations, this is empire-building money.

The lure of the lottery is simple. It gives ordinary people the dream of becoming filthy rich overnight. It also comes without all of that pesky hard work year after year and having to save endlessly all along the way. Again, all newly attained wealth comes with the need for extreme responsibility. Sadly, many lottery winners seem to have ignored that lesson. It has been reported over the years that many lottery winners have gone absolutely broke, and some went broke in just a few years after becoming filthy rich.

Maybe it seems hard to imagine that you could blow through $100 million, $200 million, or more. It is simple to do. Careless planning and careless actions can wipe out almost any sum in short order. Have you ever heard that you should only have to become rich once? It’s true. There are many pitfalls waiting for unprepared lottery winners. Again, extreme wealth comes extreme responsibility.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

Any new instant wealth can impact all of your family relationships and friendships. Running out and bragging to everyone could be more than dangerous – it could even cost you your life. Immediate financial advice and tax advice is a must, so is a budget. Being an ATM and banker for friends and family can wipe you out. Knowing high finance is a must, and winning money doesn’t teach you that. If all of these points sound outlandish, there is a serious chance that you are a prime candidate to go broke despite massive wealth.

Temptations await those who unexpectedly come into vast fortunes. Jets and yachts, mansions and third and fourth homes, private islands, keeping an entourage, hosting private concerts, and on and on. Any combination of these unneeded temptations could chew through hundreds of millions of dollars rapidly.

Hopefully the message is setting in. The whole point of 12 Things Not To Do If You Win The Lottery is that there are more temptations than there are reality checks. 24/7 Wall St. simply just does not want to see anyone who gets rich go broke. Again, extreme wealth brings extreme responsibility. Remember that you should only have to become rich once.

Here are the 12 things not to do if you win the lottery.

1. Don’t forget to sign the ticket and don’t forget to report to the state.

It may seem crazy that people might not sign a ticket. It seems even crazier that they might lose a ticket, or fail to report to the state that they won. Can you imagine losing a lottery ticket? Then imagine what can happen if someone else snags your ticket and shows up to collect the prize. Fighting over this is no simple task and disputes have arisen over who owns what ticket.

In a way, lottery tickets are almost considered the last form of bearer bonds that anyone can collect on if they show up with the coupons and bonds. You have to sign and secure that ticket, and you then have to report to the state.

2. Do not dare tell everyone you know (or anyone if you can).

If you are lucky enough to win millions of dollars, chances are pretty high that you will to want to brag about it to everyone you know. How could you not? Still, keep quiet for now. The problem is that telling everyone you know before you collect your winning puts you in danger, and in more ways that just one. Everyone who has ever done anything for you now may come with their hands out asking for something, or worse.

You may have heard of kidnap and ransom insurance before. Sadly, more than one lottery winner became a murder victim. If you can manage it, and if your state allows it, try to remain anonymous for as long as possible. How you became vastly wealthy will be found out in time anyway, but there is no need to hurry that along and jeopardizing yourself.

3. Do not automatically decide to take the cash option without consideration.

Taking it all now may sound good rather than getting money over a lifetime. Supposedly some 70% of lottery winners end up broke again, many within a couple or few years. Let’s say that you can choose to get $198 million up front, or you can choose to receive a payout of $293 million slowly over the course of a lifetime. Most people choose the lump sum rather than the annuity payment. After all, it is instant empire-making money.

Go see a reputable and visible tax professional and a reputable investment advisor at a top money management firm with a widely recognized company name and a long corporate history. This theme of “reputable and visible” will echo throughout.  Do this before you automatically make the decision about a lump-sum or annuity option.

4. Do not dare think you are now the smartest person to manage your finances.

Lottery winners need to immediately get outside financial advice. If you were living paycheck to paycheck before, does it seem logical that someone will know the best things to invest in and the best tax and asset protection strategies? There are many ways to invest and protect that fortune. Strategies of the wealthy often go way beyond buying stocks and bonds and letting the investments ride. As far as who to use, or who not to use, chances are very high that your drinking buddy might not be the best choice as an advisor and expert.

Having a solid and respectable team of advisors and managers from reputable firms in place will act as your buffer to protect your assets now and in the future. Do you know how to protect your assets against all threats and know exactly how to protect your estate in case you die or become incapacitated? Here is a very real hint – If you answered yes, you probably did not bother playing the lottery.

5. Do not let your old debts and obligations remain in place.

If you suddenly become filthy rich, go out and get rid of your old financial obligations and debts immediately! If you get the bug in your head of “I’m rich and don’t have to pay anymore” then just know that you are dooming yourself. Whether you take the lump-sum or the annuity option, if you have a single penny of debt in the immediate future and distant future, then something is seriously wrong. For that matter, you should not have a single debt ever again. One lottery winner in California was reportedly strapped with debt from property purchases.

If you manage to go broke down the road and still have a mortgage, car payments, student loans, credit card debt and personal bills, all of your friends and family members should get to spank or ridicule you every day for the rest of your life.

6. Do not become a high-roller or live the big life too big.

Temptation to live lavishly can be a killer. If you go from living a simple life to instantly being able to spend hundreds of thousands of dollars (or more) per week, what do you think happens to your expectations in life ahead? Chances are high that you will want more of the same.

If you start gambling in Las Vegas and are not happy until you are gambling with hundreds of thousands of dollars (or more) per play, you are dooming yourself. Wait until the real con men find you. Taking you and your favorite 50 people on a luxury cruise around the world can become very expensive, very fast. Having an entourage generally only works for people who keep making more money.

7. Do not buy everything for everyone, and not even for yourself!

Buying is fun. After all, society and the endless commercials make you think you need to own endless stuff. Do not go out and buy dozens of cars, followed by houses and whatever else, for you and your friends and family members. This will start you on a bad path, and you could easily become the next friends and family personal welfare department.

If you start buying everything for everyone, chances are high that they might expect that to last forever. The other end of the story is that you do not have to be a cheapskate either. Still, after hearing a real life personal story of one lucky winner buying more than 30 cars and multiple houses in three months it is just crazy.

8. Do not think you can live without a budget.

Budgeting is not just for the poor and the middle class. Again, extreme wealth comes with extreme responsibility. It may sound crazy on the surface that you have to live within means when you get a vast sum of money. After all, major lottery winners are generally wealthier than everyone they know combined. This also goes back to having advisors and being prudent, but at the end of the day you do still have a finite sum of money. Chances are very high that you will make some serious purchases and your lifestyle will be changed forever.

Without setting limits for yourself and for what you do with others is a recipe for disaster. Again, many lottery winners go broke. If they went broke in a very short time, what do you think the reflection about wishing for a proper budget would be?

9. Don’t become the business backer for all your friends and family.

Being a venture capitalist or a merchant banker sure sounds powerful and enticing. One common theme that has come up with lottery winners who suddenly get vast sums of cash is that their friends and family start pitching them on endless business ideas. Sure, some will sound great and some will sound crazy.

If someone has no knowledge of a particular business and does not know what it takes to actually run a business, will they do better because a lottery winner who lucked into vast wealth gave them money to start it? If your answer is yes, you seriously need to protect yourself (from yourself).

10. Do not give away the whole fortune at once.

Many winners may want to immediately share their new wealth with society. It may seem nice to give away vast amounts of cash to charity or to religious institutions. This might not be the case for everyone, but giving away an entire fortune or a large part of it to a charity or to religious institutions needs to be given great consideration. You can be generous without doing the unthinkable. Rather than giving everything away now, the current charitable trend of the extremely rich is to plan for how to give the money away upon their death, while still often leaving some for their heirs.

Imagine what you will feel like down the road when a serious crisis arises in your life or your family’s life, knowing that you no longer had the means to change it. Should you be charitable? Absolutely! Should you give it all away? Absolutely not!

11. Do not develop celebrity and athlete envy.

Those movie stars and entertainers sure seem to live the high life. Keeping up with the Jonses is bad enough, but definitely do not try to keep up with the Kardashians or other celebrities. It may seem cool to own a 200-foot yacht. It may seem practical that certain celebrities have an entourage, or to have a film crew following you around. It may seem cool owning castles in Europe. Owning an original Picasso painting sure sounds impressive.

Having a big new private jet makes sense for a lot of people. Trying to dodge taxes might even sound appealing to misguided people. Now go add up the price tags of these things, plus the cool cars and houses and the rest of it. You can go broke really quickly. Just ask actors and athletes who did this how they feel now.

12. And don’t think laws and decency standards no longer apply.

Some people think the rich can do whatever they want without consequences. It is true that the wealthier you get, the more high-class trouble you can find. It is also true that the rich can afford better attorneys and legal defense then the rest of us. Still, living a reckless life without concerns about the law will not keep you from going to prison, or worse. A good sports coach will tell any star athlete upfront that chances are high they will have to be human for far longer than they are going to stars.

Movies and television shows often glamorize scoundrels, but what good does it do you if you are incredibly wealthy and such a pariah that no one will associate with you? Remember, you don’t get to take any of your wealth with you.

Get Our Free Investment Newsletter

I have read, and agree to the Terms of Use

24/7 Wall St. would not want anyone who wins the lottery to end up broke. Losing wealth, or worse, is just not how things are supposed to go. Following a list of tasks may sound easy enough. Unfortunately, life and temptations can often interfere with logic.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.