Top 5 Survival Tips for Winning the Lottery

Winning the lottery is a dream come true … right?
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It's the dream of the millions of people around the world who play lotteries -- to win the big one and be set for life. But for some, that dream come true has been a nightmare. The annals of lottery winner lore are riddled with people who won millions and found that their windfall made their lives much worse, not better.

Take Willie Hurt, who won $3.1 million in the Michigan Lottery in 1989. Within just a couple years, Hurt was divorced, estranged from his children and addicted to crack cocaine [source: Business Pundit]. Suzanne Mullins won $4.2 million in the Virginia Lottery. After a family member suffered a lengthy illness, she spent $1 million on his care and went into debt to the tune of nearly $200,000 [source: Bankrate].


At the other extreme are Al and Carmen Castellano, a hard-working family who scraped by during their lifetime together, putting three children through college and finding happiness with what they had. Al and Carmen won $141 million in California's lottery in 2001. The Castellanos have been largely unchanged by their windfall: They have the same circle of friends, they still go on family trips (though more comfortably). They made sure they put their money to use, rather than be changed by sudden riches.

We spoke to the Castellanos about how they managed their record-setting lottery win so well and compiled a list of five lottery survival tips any winner should take into account.

5. Slow Down and Lay Low

The store where Al bought the ticket. To maintain an appearance of normalcy before coming forward, he dropped by as usual.
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Because the Castellanos won the largest single jackpot in California's history, they were instantly sought by the media. Fortunately, no one knew who had the winning ticket, so the media had no one to hound. This proved to be an intelligent move.

The family hunkered down in their home for five days, creating their plan with their children and only a few trusted others who they determined could help them. While they planned, they also tried to appear as normal as possible. The neighborhood children who played with their grandkids came over as usual. Al went to the store where he bought the winning ticket as he normally did and chatted with the owner, who was unaware he was speaking with the winner. As a precaution, the family parked their cars several blocks away so they could make a getaway if their winning status leaked.


And when they cashed in their ticket, they opted for the quietest locale. "We went to an out of the way lotto office," said Carmen, "because we knew the media would be waiting at the nearest lotto office."

By remaining out of sight and quiet until they had all their ducks in a row, the Castellanos was able to step out to accept their winnings on their own terms.

4. Hire Professional Assistance

Al and Carmen Castellano, at the press conference they held following their win.
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As they planned how they would come forward, the Castellanos methodically added to their small circle of knowledge. They knew they needed help not just with handling their money, but in dealing with the media as well.

For help, the Castellanos turned to people trusted by family members. Their son-in-law, a chief financial officer, recommended legal and accounting firms. Carmen had a close friend in the television business, who recommended a media representative. Based on these intimate recommendations, the family cobbled together their expert team.


Others recommend that lotto winners quietly audition a number of professionals who can assist them with finances, legal issues and publicity. Ask for references and research them thoroughly. And always interview at least one professional with no connection to anyone you know [source: Jaffee].

The ins and outs of the tax code that governs lottery winnings are difficult for even pros to handle, let alone a lottery winner. However you assemble professional help, be sure to do it before coming forward. "I would certainly advise someone to do that so that you aren't caught unprepared," said Al. "Because even with all of the preparation we did, it was really quite overwhelming."

3. Splurge on Yourself -- Within Reason

Taking a vacation away from your money (and the media) is a good early step after collecting your winnings. Perhaps a nice cruise.
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When the Castellanos won their $141 million, Carmen initially decided that the family would stay in the same modest home they'd lived in throughout their marriage [source: Glionna].

However, that was no longer an option after people the Castellanos didn't know began coming to their home to ask the couple for money. So the Castellanos moved to a larger and newer home in a nearby affluent San Jose community. They also purchased a vacation home overlooking Monterrey Bay and hired a staff to help with the cooking and cleaning. The couple spends their winnings on vacations for themselves and their family and has paid off their children's student loans. The lavish life one might imagine for two people who netted around $70 million is nowhere to be found near the Castellanos, however.


Financial advisers agree that the lifestyle the couple has set up for themselves is a sensible one. Because of poor planning and overzealous spending, 70 percent of lottery winners live to see themselves lose all of their money [source: Begin and LePage].

The moral here: Take a vacation away from your money during the first month after winning. When you return, park it in some sensible investments.

2. Choose How Your Money Will Help

If one of those hits, exactly how will you use your money?
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Janite Lee, who won more than $18 million in the Missouri Lottery, found that a fortune can dry up quickly. After just eight years, she was down to a mere $700 [source: Bankrate].

What makes Lee's plight particularly heartbreaking is that her winnings accelerated her philanthropic giving. She lost her money by donating it to worthy causes; it wasn't conspicuous consumption that led to her going broke. Winning the lottery doesn't mean a good person must become a miser to hang onto his or her money. It means that the winner should choose exactly where donated money will go.


"Within about 30 minutes, she was sitting down writing a list of all of the groups she wanted to help," Al Castellano says of his wife after she learned they were millionaires. This short list lead to the creation of the Castellano Family Foundation, a funding branch of the family's lottery holdings, they initially endowed with $5 million. The Castellanos decided that they would focus their philanthropy on Latin American arts, culture and community. The narrow focus immediately vetted potential candidates, and by establishing a foundation, the Castellanos didn't have to personally field requests for money and contributions.

1. 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.
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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.

Lots More Information

Related Articles

  • Bankrate. "8 lottery winners who lost their millions." MSN Money. Accessed June 13, 2010.
  • Bankrate. "You've won the lottery! Now what?" MSN Money. Accessed June 12, 2010.
  • Bloom, Autumn. "10 tips for how to handle a big lottery win." Associated Content. September 27, 2007.
  • Business Pundit. "10 people who won the lottery - then lost it all." September 9, 2009.
  • Castellano, Al and Castellano, Carmen. Personal interview. June 1, 2010.
  • Glionna, John M. "Lucky in love, lucky in lotto." Los Angeles Times. June 30, 2001.
  • Hispanic Foundation of Silicon Valley. " Hispanic Foundation of Silicon Valley announces recipients of 2009 La Familia Award." September 16, 2003.
  • Jaffe, Charles A. "2004 Winners Handbook." California Lottery. 2004.
  • Winter, Deena. "Financial planners: Winning the lottery isn't always a dream." Lincoln Star Journal. February 26, 2004.