First, take your winnings as a series of yearly payments rather than as a lump sum. That saves a lot in taxes by having more of the income taxed at your lowest rate.

As each installment comes in, hold out enough to pay the taxes and pay off all your debts (and don’t incur any new ones). With what remains, purchase a lifetime annuity from a reputable company like TIAA-CREF or Vanguard. This will assure you of getting the most out of your winnings throughout your life, and make your fortune less accessible to others.

Then, become a health nut and take really good care of yourself so that you live long enough that the annuity company loses money on you. (The book I strongly recommend for this is “TRANSCEND” by Ray Kurzweil and Terry Grossman.)

Is this what you would expect if you went out with a friend who happened to have won the lottery some time back? I don’t know about other people, but I would expect to split the bill, in fact would be extra scrupulous in splitting the bill because I would want to let them know that I still consider them a friend and not a bank, and that’s how I treat my friends. I’ve got enough cash to pay for dinner out a couple times a month, so why would I expect someone to pay my way jsut because he or she has a lot more money than me?

If they invited me out to something really swanky that didn’t fit in my budget I’d jsut tell them I’d love to come but can’t afford it. If at that point as friends they want to pay for it then I’d consider it a gracious gift and go out with them as friends. People do need friends, after all, even lottery winners and rich people.

Then take the annual payout (NOT the lump sum), consider moving to a state with no income tax, and tell no one.

I’m a very strong headed person. I don’t usually give money out to individuals, but to places that help many people with the money I share.

John DeFlumeri Jr.

Think about it. Imagine you won the lottery. If you went out to dinner with some friends or family, would you pay for their dinner? You’d have to. Imagine what your friends and family would be thinking if you didn’t. They might not say it, but deep down, they’d expect you to pick up the tab, since you’ve got all that money that you don’t “deserve.” Could you live like that for the rest of your life, with all your family and close friends implicitly considering you their sugar-daddy? Would it ever end? Do you honestly think you could eliminate that expectation without hurting any feelings?

That same expectation is there with people who DID “earn” it, but to a far lesser degree. There is still envy and resentment, but without the corrosive feeling of unfairness that dooms normal relationships tainted by large wealth disparities.

I wouldn’t mind finding out if I could handle a windfall either. I’m pretty sure I could but, I’ll probably never know.

That being said I’d still make sure the money was out of my reach for 6 months, speak with a few non-commission financial planners and apart from perhaps buying modest accomodation (which would improve the cashflow from my wage anyway and what was my rent could be the ‘fun money’ every month) structure it so most was invested to stop me blowing it like the guy in the story did because we all like to think we would take winning in stride but who really knows?

I wouldn’t mind finding out though!

Long time friends and cousins they had grown up with and trusted tried to take advantage. Some times it was bringing an agent to try to buy out the lottery win (most always a bad idea), where the friend or cousin would hide the fact he would get a “finder’s fee” if the brother signed that day. Most of the time it was along the lines of “hey, I got a great idea, why don’t we start/open a business, you put up the money and I’ll run the shop.” or “my trucks in the shop again, could you loan me a bit so I can get a new one”. In their eyes you’ve become the bank for “their” dreams and “their” needs. So if you think about how most people react when the bank turns them down for a loan, imagine how many of your family and friends would act. Additionally, unlike the bank, they get to nag you every time they see you. They bring it up again and again and again, until you tell them you don’t want to hear it, then you’re the greedy one, you’re the selfish one. Or even worse, you give them the loan, and they not only don’t hold up their end of the bargin letting the money evaporate, but they come back for more.

Soon every time they see you, you refused to support their dreams, or they owe you money like they’d owe a bank and its a reminder. How comfortable are those get togethers going to become?

If you somehow think this won’t happen, you’re kidding yourself. It happens to every winner to varying degrees. Eventually they go broke, learn to say no, or insulate themselves away from these folks.

It buys you security (yes, the decreased chance of food poisoning is important) and time, because you are able to have more foods on-hand and don’t have to go out looking for meals each day.

I knew a game developer who had millions in stock options, which he saw dwindle rapidly one day during one of our recent bubble bursts. He was able to get out with one million, which he put into a 5 percent savings account (this was the dot com bubble). He could easily live off the interest. I’m sure that the ROI interest has been reduced, but he also kept up his personal interests, and learned a lot about selling.