Top 5 Survival Tips for Winning the Lottery

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.

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."

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.

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.

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.