2023-08-04 17:21:59
Most Powerball lottery jackpot winners in the United States prefer to pay in cash, even though they have no idea how to manage it and this also means a sharp cut in the amount of the prize. Nine years ago no one asked for payment in 30 annual installments, why?
One of the recent cases is that of Edwin Castro, who in November 2022 became the top Powerball and lottery winner in the world. The jackpot was 2.04 billion dollars, but in cash he received US$997.6 million which, following taxes, finally became US$628.5 million. Castro has already begun to spend on luxurious mansions and cars, which has been described as a mistake by experts in managing lottery prizes.
Edwin Castro’s mansion cost 25 million dollars (Photo: Simon Berlin / Dirt)
While hitting the jackpot is a stroke of luck, its administration should not be left to chance. You have to have a cool head, your feet on the ground and know how to say no on many occasions to go to the list of sad stories of winners who ended up in bankruptcy, even sleeping in a car.
Can you imagine winning the $314 million jackpot and being left with nothing? Many would think that there is no time to earn that money, but it is possible. That happened with the businessman Jack Whittaker, who at Christmas 2002 won the then largest jackpot in Powerball history.. He was the Edwin Castro of that time. His prize money was $113 million, but four years later he lost it all: his family fell into disgrace, he became an alcoholic, got divorced, and died 18 years following winning the lottery.
WHY HAVE THE WINNERS OF THE LOTTERY ASKED FOR THEIR PAYMENT IN CASH?
In 2014, Vinh Nguyen, a manicurist who for five years was a loyal lottery ticket buyer, won the $228 million Powerball jackpot in California. To the surprises of many, this young man did not want to lose half of his money and chose to pay him in 30 annual installments. Since then, 9 years have passed, and no buyer of that lottery has asked for their prize to be delivered in parts. For what is this? Why do they ask for the money in cash, even if they lose more than half?
For wealth planner Robert Pagliarini of Pacifica Wealth Advisors, there are many reasons that might influence the decision-making process, but he sums it up like this: “Lottery winners are given a choice and don’t really understand the ramifications. It’s like ‘Oh, well, I’ll just take the money now.’ Those who take the lump sum just want their money and they want it now,” he told The Sun US.
The specialist explained that it might be advantageous for the winners to accept the global check, since it means that they have full control of their prize, but warned that it might be a double-edged sword, as in the case of Jack Whittaker, who, by winning the boat, already had a net worth of 17 million dollars. However, he lost everything.
Receiving all the money might be risky for players if they make mistakes, such as bad investments. “In this case there is no repetition. It’s not like you’re going to win the lottery once more. You have a chance in this” he explained.
THE ADVANTAGES THE COLLECTION OF THE LOTTERY PRIZE IN ANNUAL PAYMENTS
The expert recommended that lottery winners choose their prize in installments, also known as an annuity, instead of the lump sum, since the first option would give them a margin to make mistakes, since they would have a backup.
“The real advantage of the annuity is that every year you get a new check. It gives you the opportunity to make bad decisions and still recover from them, while the lump sum puts pressure on the person not to make mistakes,” said Robert Pagliarini of Pacifica Wealth Advisors.
Pagliarini advised that taking the annuity might be the best option for lottery winners who don’t have a lot of wealth management experience, have a history of debt problems or worry they might be inundated with cash requests.
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