Accountant offers potential lottery winners advice - WNEM TV 5

Accountant offers potential lottery winners advice

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People dream big when the lottery grows to a jackpot worth hundreds of millions of dollars.

What happens when those dreams become a reality? TV5 sat down with an expert on investments and money planning to find out what you should do if you strike it rich.

"I hope you choose a lot of your friends with wisdom," said Carroll Baker, certified public accountant in Flint.

If you're lucky enough to win the Mega Millions jackpot you'll be faced with a choice to take the lump sum or the yearly annuity.

If you choose the lump sum you'll get a payout of nearly $320 million. That's because the state and federal taxes are taken out right away. If you take the annuity jackpot, the state invests your winnings which gain interest. You would receive 30 payments over 29 years. That income would be taxed each year.

While most winners take the lump sum, Baker said it may not be the best option.

"Simply put, you will always have a shelter and the money will be there earning interest," Baker said.

That could keep a lottery winner from going bankrupt, something that is all too common with previous winners.

"Yes, people go out and start buying not knowing how much they have and why are they buying? The money doesn't last forever," Baker said.

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