The Powerball lottery is up to a trillion dollars or something like that. I was having a conversation with someone today and they were talking seriously about what they’d do with this pretend amount of money.
But it’s kind of an interesting question. What, exactly, should you do if you came into sudden, extreme wealth? Here’s what I’d recommend:
- First, if you’re going to
waste money onplay the lottery, always choose the lump sum option. You will do better in mutual funds over time than the annuitized payout.
- Get a trusted team of people in your corner, working for you. You need an estate planning attorney, a tax attorney, and an investment professional. Meet with these people individually and make sure you understand what they are going to do for you. They work for YOU, and you need to understand all the moving parts of a trust, an LLC, and the need for umbrella liability and other types of insurance.
- Set all of these entities up before you ever claim the money. Make a list between you and your spouse (if married) of the 5-10 charities you’re going to support and how much you’re going to give them. Support those charities lavishly, but when you’re done, you’re done. Don’t forget the tithe to your church. Each year you can choose more or different charities.
- Always be in agreement with your spouse about what to do with money. I can’t stress this enough.
- Make a list of the family and friends you are going to bless and do so. Learn to say no. When you’re done, you’re done. Understand that money brings out the weirdness in people.
- Put yourself on an upgraded, but reasonable budget. For example, if you deposit 10 million in a simple S&P 500 Index mutual fund, you can pull off $20,000 a month and never touch the principle.
Is there more you can do? Of course. But this is where I’d start. What about you? Sound off in the comments.