Winning Powerball can be so exciting. But, before you spend one red cent of that Powerball money, you will need to make a plan beforehand. Keeping a cool head is very important at this stage, and it will benefit you through the entire process of claiming and receiving your winnings.
Keep a low profile
It's very important you know what to do when you win Powerball. In most cases, as a Canadian, your win will make the news and everyone from close friends and relatives to people you never knew existed will be pestering you for a handout - and that includes charities, other organizations, and financial "experts".
You may be able to set up a trust to receive the winnings, or have a lawyer claim the prize on your behalf. Also, don't go home. Hold up in a hotel to avoid the press and "family and friends" from popping over unannounced and in need. Don't post on social media, and keep as quiet as possible.
Consider the annuity option
There are two ways to receive the Powerball prize: as a lump sum payment or as a yearly annuity. Taking the lump sum means that you will get less money and ultimately, after taxes, end up with far less in the end. With the annuity, over the 30-year period, you will get the entire amount of your win, and only need to pay taxes on that yearly amount.
Also, a lump sum payment means you might have the inclination to spend more money, so you could potentially end up in a situation where the toys, houses, trips, gifts, and other expenditures have worn out your winnings. With the yearly annuity, if you happen to blow through your first year's payment, you know that you will have next year's with which to start over.
Seek out professional advice
Work with a well-trusted and experienced financial advisor to help you control spending, invest wisely, and deal with the taxes. You should also contact a lawyer to help you deal with estate planning and gifting. With proper investment strategies, you will be able to make money on your winnings and never touch your principal, only spending the amount that comes in as "income."
Don't immediately change your life
Don't alter your lifestyle immediately. Don't buy a new house and new car, or travel extensively. Instead, have a plan in place to do these things in an order that won't disrupt your family's routine. Staying calm and dealing with taking care of the little things first is more important than a mansion or Porsche. Remember that you will need to save and invest the majority of the money to take care of you and your family well into the future.
Immediately pay off all debts
Debts can be detrimental to you in so many ways, and if you are deep in debt and win the Powerball, you may want to spend on other things and leave your debts to stew for a time. Pay off all your debts first before you spend a dime on anything else and get them out of your life forever.
Create a budget and stick to it!
As most of us are not experienced with having a lot of money, it can be difficult to curb the drive to spend wildly when winning Powerball. Create a budget for yourself and stick to it religiously.
Don't overspend the budget in any way, shape, or form. Keeping to a budget allows you to know how much money you are spending and how much you have left. If you can keep to the budget, you can live a varied and luxurious lifestyle without having to worry about draining your winnings.
How to claim your prize if you win a Powerball jackpot
Knowing how to claim your prize if you win a Powerball jackpot is an important but not complicated process. There are differences for Americans and Canadians, though, when claiming prizes.
For Americans wanting to claim a prize
Claims can be made at state lottery offices or headquarters in the state the ticket was purchased, and taxes are taken from the winnings.
For Canadians wanting to claim a prize
It is illegal for Canadians to bring lottery tickets into the States, so, for ease of claim, leave your tickets in a rented mailbox or have a friend in the States keep it for you. If the ticket was purchased online, have the company hold the ticket on your behalf.
Although you will have to pay a non-resident alien tax of at least 30%, you do not have to report the winnings to Revenue Canada. You only have to pay tax on any money you make from your winnings.
For further information on claiming a Powerball prize, visit our How to Play page.