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I'm planning to win the Oregon Lottery next week. How do I get my money? The prize will be way too big for my bank's insurance coverage. Do they set up a Swiss bank account, or what?
—Always Optimistic
Believe me, Always, I sympathize with your impression of a lottery jackpot as the kind of unimaginable sum that would do to a bank what logic paradoxes used to do to evil computers on Star Trek. As a freelance journalist who recently reacted with astonishment to the news that they make $50 bills, I, too, feel poverty's bitter sting. But the truth is, it's not that much money.
The current Oregon Megabucks jackpot is $7.4 million. Taking that as a lump sum rather than in annual payments would knock your after-tax haul down to around $2.5 million—a nice chunk of change, but not exactly a neutron star of cash in whose presence the ordinary laws of commerce cease to have meaning.
But what about the multistate games—Powerball, Mega Millions—that really do feature the kind of jackpots that let you buy the house between Mitt Romney and C. Montgomery Burns?
Well, those payouts are done by electronic funds transfer, ideally to multiple financial institutions in such a way as to minimize exposure to bank-failure risk and tax liability.
Since the average lottery winner has no idea what I just said, finding a qualified financial planner—this does not mean upgrading from TurboTax to TurboTax Deluxe—is strongly recommended before you collect. While you look, get your winning ticket validated at lottery HQ.
Validating registers you as the winner so you don't have to worry about loss or theft of the ticket. It's a smart idea that few winners take advantage of. Of course, folks who are really smart with their money don't blow it on Powerball tickets in the first place.
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WWeek 2015