If you win the lottery, you may need help managing your new fortune. Assemble your financial and legal wolfpack Overall, you will want to consider the time value of money - that is, how much you can earn under each scenario comparing the timing of the payments that you receive.ģ. You should compare the after-tax proceeds and your intended investment return (lump-sum payment) with the after-tax annuity payments and intended investment return (installment payments). However, if you prefer to set an allowance for yourself to help control spending, an annuity payment plan can help instill fiscal discipline. If you choose the lump-sum payment, you have the peace of mind of receiving all the funds today and can invest the proceeds to earn a financial return. If you choose the installment plan in the form of an annuity, each installment payment will be taxed.įinancially, a dollar today is worth more than a dollar tomorrow. If you choose the lump-sum payment, you will receive your prize winnings upfront, and immediately will owe income tax on the full amount. You have two choices when you win the lottery: you can receive a one-time, lump-sum payment or 30 installments over 29 years. You have 60 days from the day you present your winning ticket to determine how you want to receive your prize.
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