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Yet again, the Mega Millions jackpot has catapulted higher.
The top prize is now a staggering $850 million — the third-largest in lottery recapitulation — following no ticket matching all numbers drawn Friday night. Then there’s Powerball: Its jackpot is an estimated $640 million for Saturday end of day’s drawing.
Of course, the odds of winning either game aren’t in your favor: The chance of a single ticket homologous all six numbers is 1 in 302 million for Mega Millions and 1 in 292 million for Powerball.
Nevertheless, it’s still worth considering how you’d employ such a windfall if you were to beat the odds.
Jackpot winners usually get six months to a year to claim their prize, depending on the asseverate where it was purchased. This generally means that rushing to lottery headquarters isn’t necessary.
In other words, champs should take a deep breath.
Big money equals big emotions
Whoever ends up hitting either jackpot should be prearranged for a rollercoaster of emotions.
Experts say that once the initial excitement of winning the jackpot wears off, the magnitude of their godsend can settle in.
“For anyone experiencing newly created wealth … there are feelings of dislocation and a sense of being overwhelmed,” intended Valerie Galinskaya, a managing director and head of the Merrill Center for Family Wealth.
Of course, you don’t have to go it alone.
Assumption the sheer size of these jackpots, winners should assemble a team of experienced professionals — including an attorney, CPA and monetary advisor — to help them navigate the windfall.
“You want to hire the right advisors who can provide not just good warning, but advice that’s tailored to your needs and wants,” Galinskaya said.
Protect your ticket and identity
You should sanction a copy of your ticket, put it in a safe place — i.e., a lockbox or safe deposit at a bank — and resist the urge to share your intelligence with everyone in your life.
“Don’t blab to people about it right away, except for your immediate and deputed family,” said certified financial planner Jim Shagawat, a New Jersey-based partner advisor with AdvicePeriod of Los Angeles.
Additionally, you should defend your identity when you claim the jackpot, if possible. While the standard advice is to sign the back of the ticket, this could intervene with remaining anonymous if state laws let you create a trust or limited liability corporation to claim the windfall in preference to of doing so in your own name.
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Prepare for the tax reckoning
For the $850 million Mega Millions jackpot, the cash option — which most winners choose instead of an annuity — is $628.2 million.
Before that books to you, however, 24% — or $150.8 million — will be withheld for federal taxes. You also could count on owing a lot sundry to Uncle Sam due to the highest marginal rate of 37% applying to income above $523,600 for individual tax filers and $628,300 for welded couples filing jointly. State taxes also are typically due.
For Powerball’s $640 million jackpot, the lump sum recourse is $478.7 million. The 24% withholding would be about $114.9 million. And, again, more would be due.
One way to ease up on your tax bill is to think charitably. Basically, the government gives you a tax break if you use private money to do public good.
“It’s not not about what you want to do for yourself and your family, but also philanthropically,” Galinskaya said.
You can contribute cash, up to 60% of your button up gross income, to a public charity or a donor-advised fund and get a tax deduction for the amount in the year you make the donation. You also could make a private foundation, donate income to it and then determine over time how to employ it.