CPAs May Make the Best Lottery Winners
by Terri Eyden on
By Teresa Ambord
You've heard the horror stories of lottery winners who blow through their winnings without seeking financial advice and end up worse off than ever. That probably won't happen to Chesapeake, Virginia, lottery winner Randy Latham.
Latham is a CPA, so the advice is free. Just days ago, after he bought a Maximum Millions scratcher that won him $1 million, he didn't rush out to quit his job and drive home in a new red Corvette. Latham is kind of a quiet guy. Instead of setting off fireworks he said, "I'm just going to put this in my pocket and go home and talk to my wife." Smart man. Actually, he said he planned to retire next year anyway, so the timing is good.
Latham purchased his ticket at a 7-Eleven store in Chesapeake. Thanks to his winning, the store received a $10,000 bonus. The state lottery sponsors dozens of scratcher games, with prizes ranging from $20 to $1 million. Latham was the twelfth million-dollar winner. Three top-prize tickets remain unclaimed.
Latham had two choices for collecting his prize. He could've taken one before-tax payment of $564,000 or the full million over a period of twenty-five years. No doubt he ran the numbers before he and his wife chose the cash option. With his financial background, he'll likely fare better than most lottery winners.
Tips for Lottery Players
- Secure the ticket in a fireproof safe or safety deposit box.
- Make multiple copies of the ticket and put them in different secure places.
- If you win, resist the urge to talk about what you won; maintain as much privacy as possible.
- Consider claiming your winnings through a "blind trust" to protect your identity. Many states permit winners to use blind trusts to protect their identity and privacy. This has been successful at times, so much so that lottery winners can sometimes prevent even people close to them from knowing that they won money at all.
- Before you claim your prize, sit down with an attorney and an accountant to understand the legal, tax, and accounting ramifications of winning and claiming the prize. Depending on the options available, it's possible to increase your winnings.
- Put into place a temporary estate plan.
– From the Loeffler Law Firm, LLC, an Ohio asset protection and estate planning law firm.
Here's Another Smart CPA
In 1990, a Sherman Oaks, California, accountant, fifty-eight-year-old Ralph Laird won $27.58 million, which made him the largest single lottery winner in California at that time. Plus, out of the twenty-six tickets he bought in that game, he also had five tickets that correctly named five of the six winning numbers, adding another $16,354 to his already substantial jackpot.
How did he do that? He's a numbers guy. He told Los Angeles Times reporters that a year or so earlier he "just looked at the previous winning Lotto numbers" and chose ten that he said seemed to come up more often than the others. Then he designed a program to scramble them into every possible combination. A lottery official at the time discounted his method, assuring the public that "any statistician can tell you . . . that lottery draws are totally random." Still, his win is pretty impressive.
The Lairds collected $1.34 million, before taxes, each year for twenty years.
On the night they won, Laird's wife was in another room when the winning numbers were announced on TV. She knew they'd won when she heard four simple words from her husband: "The fat lady sang."
Yet, according to the Los Angeles Times, they maintained their composure. They quietly retired from their jobs, helped their adult children with careers and finances, and made one big splurge for themselves. They remodeled their bathroom.
You may like these other stories...
A version of this article originally appeared at Practice Development Counsel. Many professions and industries struggle with inter-generational challenges. The advertising industry is just one of those industries...
By Phyllis Weiss Haserot, President, Practice Development Counsel This post originally appeared at Practice Development Counsel. Reflection is something I do a lot of – I have for many years quite...
By Jeff Davidson Whether you work for a large organization, a small accounting firm, or are self-employed, within the course of the workweek you'll undoubtedly encounter a variety of irritations, frustrations, and...
Upcoming CPE Webinars
In this exciting presentation Excel expert David H. Ringstrom, CPA shares tricks that you can use with pivot tables every day. Remember, either you work Excel, or it works you!
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.