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Top 5 Survival Tips for Winning the Lottery


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Lump Sum or Annual Payments?
75 percent of lottery winners opt for lump sum payments. UK winners Brian and Joan Caswell pose with their big check in 2009.
75 percent of lottery winners opt for lump sum payments. UK winners Brian and Joan Caswell pose with their big check in 2009.
Christopher Furlong/Getty Images

This question is as important for a major lottery winner as finding the right money management team.

In most cases, taking a lump sum means getting a smaller payout than you'd get from an annuitized arrangement where the state or lottery corporation pays your winnings in yearly installments. So why would you go for less with a lump sum? Seventy-five percent of all winners, including the Castellanos, opt for the lump sum [source: Sockman]. It simply makes more sense: Annuitized payments include the roughly 5-percent interest the state earns on the bonds it takes out to guarantee your winnings. Most lottery winners bet they can get a better rate by investing the lump sum.

Dying shouldn't be an issue in your decision. Lottery winnings -- annuitized or lump sum -- become part of your estate, so your heirs will receive payments [source: California Lottery]. Arranging this properly is yet another reason to hire a tax attorney and accountant.

Other questions include whether you feel you can trust yourself to not squander your winnings. This may mean you're better off with annuitized payments.


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