What to Do If You Win the Lottery

Imagine turning on the local news to discover that the winning lottery numbers match those on your ticket. What would you do? Would you jump up and down screaming? Would you burst into tears of joy? Would you call your friends and family to share the good news?

But then what? What would you do after reality set in? Eventually a lottery official would hand you a check while smiling for a photo opp. The reporters would start buzzing around asking you, "How does it feel winning the lottery? What do you plan on doing now that you're a multimillionaire?" Even if you choose not to voice the truth out loud, you will still have to answer those questions, if only to yourself.

Many lottery winners get their money, waste it, and wind up worse off then they were before they won. Would you really want to be one of them?

A smart move might be to do the following with your winnings.

1. Pay your taxes. Is there a worse enemy to have than the IRS? Remind me who finally arrested Al Capone? And whatever happened to the first winner of Surviver?

2. Pay off your debts. Why procrastinate and incur more interest expense?

3. Put $2 million into a trust fund with you as the beneficiary. Have a legitimate bank serve as trustee, and tell them to invest this money in low risk investments. Assuming that the trust fund has average annual returns of greater than 5%-The stock market surely does.-then the fund can be instructed to pay its beneficiary $100,000 a year for life. (This $100,000 annual payment is 5% of $2 million, so this trust fund will turn into a perpetuity because you as the beneficiary and your heirs will be able to live off the interest that grows from the principal, and the principal will never run out.)

4. If you have any favorite relatives, you can set up similar trust funds for them. Imagine setting your Mom up, so she never has to work another day in her life.