Where to Deposit Lottery Winnings: A Complete Guide

So, you’ve just won a jackpot, and you’re over the moon. Congratulations! But, now comes the hard part — what to do with the money? Where to deposit it?

You can deposit your lottery winnings in a few locations. A simple bank account will do in most cases until you figure out what you want to do with the money. If you want anonymity, you should have a lawyer create a legal entity, set up a trust account for that entity, and deposit the money there.

Winning the lottery is not a common situation, and you probably don’t know what to do with that large sum of money. Before you make any decisions, it’s best to read this guide and find out what the best course of action is.

Choosing Between Lump Sum and Annuity

Lump-Sum or Annual Payments Affect the Tax Bite

The first step to take when you win a lottery prize is to claim it, naturally. Smaller prizes are easily claimed, while a larger sum will take more time and a more complex procedure.

In most states, you have up to a year to claim the prize, but it’s best to check with your local lottery officials how much time you have. There are some exceptions like Texas, Virgin Islands, etc.

Furthermore, when you do get there to claim the prize, you will have to choose between a lump-sum payment and annual payment over the next 20 or more years.

Each option has its pros and cons, so you have to understand them to make the best decision.

Lump Sum Payment

Lump Sum Payment

Lump-sum payment gives you immediate and full control of your entire prize. However, some may see this as a con too. Of course, it all depends on how you handle the money. In either case, the money is yours to do with as you please.

But it’s also a huge amount of money to manage, and if you don’t do it well, you’ll end up in more problems than if you hadn’t gotten the prize. An important thing to know before claiming the lump-sum prize is that you will get a smaller amount of money than what was claimed. The biggest culprit for this is the taxes. You will end up with about 61% of the money you were supposed to get.

That’s still a sum large enough, and you get it right away, so it can be truly tempting.

Annuity Payment

Annuity  Payment

With annuity payment, the biggest pro is that you get 100% of the money you’ve won. However, you get it over a certain period of time, not right away. Usually, it amounts to around 30 years, although this depends on the state you’re from and the type of game you’ve played.

On the other hand, you get a considerable amount of money every year, meaning that you wouldn’t have to work in most cases. Plus, it takes some of the risks off your back. The payments are big, but not big enough to cause you any concern.

The annuity also allows you to pay fewer taxes. You won’t be able to invest a lot, which is a drawback, but you also won’t be able to lose a lot of money on poor investments. Another bonus would be that you won’t be too tempted to give the money to people who just want you for your money — you’ll have enough for a comfortable life, but not enough to borrow and lend.

However, the benefits of the annuity also depend on your age. If you’re 60, for example, there’s a low likelihood that you’ll spend all of it in your lifetime. It goes both ways. If you’re only 20, you’ll spend the money by the age of 50 to 60, and if you don’t work during that time, you’ll have to find a job then, which can be difficult.

Which to Choose?

Which to Choose?

Most people wouldn’t know what to pick. And this decision is entirely up to you. For one, consult a professional and take their advice. But be smart about it as well. Next, understand how much is the annuity. For example, if the annuity is too small for you to live off of in a year, you may opt for lump-sum payment based on that.

Another case could be that you have big debts to pay, and your annuity wouldn’t cover it. So, a lump-payment makes more sense. The same goes for the case when you want to buy a house.

Maybe you’re not confident that you’ll be able to manage that big of an amount of money, so you’ll opt for an annuity. In either case, be careful and remember not to make quick decisions. The safest place for the money during that 180-day waiting period is with the lottery officials, so let it sit there for a while until you come to a satisfying conclusion.

Where to Put the Lottery Money?

Where to Put the Lottery Money?

Do you know that big check that they give you when you win the lottery? Well, it’s just a souvenir and a prop for pictures. In fact, the money doesn’t arrive in the form of a check. It will land on your chosen account in a certain amount of time, depending on the amount of money, the type of payment, and the state.

Once you win the lottery and claim the prize, a certain amount of time has to pass before they can make that payment as they have to collect all the money from the lottery sales from all the states in the U.S.

When they do, the taxes will be deducted, and your prize will be deposited into your bank account. Of course, this could be one of your old bank accounts that you were already using or a specialized bank account for large winnings.

To choose between different options, you will have to consult a professional. A general recommendation is to get a certified accountant and an attorney that you trust and take them to the bank with you. Consult with the bank employee there and see what works best for you.

But before you go, it’s smart to know that even the simplest accounts work. They are good because you can access the money whenever you want and they are not a big fuss to open. However, the specialty accounts may limit you somewhat in the way that you spend the money, reducing the amount you can give to charity, the amount you can lend, etc.

Furthermore, a simple savings account could also be a good option as it’s just as simple as a regular bank account, and it will give you some time to think and prepare for spending.

Of course, the stock market is another option, but don’t be too quick to invest. The fact is that you don’t become an expert broker as soon as you win some money, so don’t try to be that. Take some time to consider what a good investment might be.

And be especially wary of financial or investment advice from your family and friends if they are not experts. Don’t invest in anything risky. The only advice you should be taking should come from the absolute experts on the market — and you can afford them now.

So, even if your favorite cousin asks you to invest in her avantgarde bakery, politely say no.

As a bonus, the investment might not even be necessary if you manage the money correctly — you can live a full, comfortable life, be financially independent and not lose a hair over the stock market fluctuations.

Best Tips for Handling the Sudden Fortune You’ve Got

Best Tips for Handling the Sudden Fortune You’ve Got

Lottery winners are lucky, as you know, but they are also in a pickle when it comes to what to do next. There isn’t a manual or a guide that can help them. However, there are some simple tips that will make the entire journey smoother and easier for you.

Stay Informed

Stay Informed

Now that you have all that money, you have to be smart about it. The most important thing you could do for yourself and your family is to stay informed. This will prevent you from making mistakes, getting into trouble, and more.

For one, fight off the flock of people that will be coming to you in the next period. Get a new phone, make a temporary move to a new location, and get a P.O. box for all your important mail, so no one can reach you. It’s easy to fall under the bad influence when you win a huge prize.

Next, be wary of entrepreneurs and their big promises. You are probably not a financial expert nor a business professional, so you likely won’t know the most important parts of their story. People can be charming when they want something from you, so ignore them for the time being.

Naturally, you should allocate some of the funds you’ve received to some sort of help for your community, charities, and family. But, not before you get advice from a professional. This is why it’s important to take a break during those first few months while things blow over. During this time, research.

Obtain business and finance magazines, read books, invest in lessons that can teach you money management, etc. If you’re thinking of investing, stop, and learn as much about it as you can before you actually take the plunge.

Most importantly, understand the tax implications you get with the prize money. If you miss out on this, you could end up in a lot of trouble. So, learn everything you can about the taxes that you have to pay.

Hire Professionals

Hire Professionals

Another important part of your research would be finding the right professionals. People will be throwing themselves at you, trying to get you to work with them, but this is often not that good. Research and find the best experts the money can buy — they’ll be worth it, and they won’t come knocking at your door the moment you win.

You’ll need a certified accountant, a fiduciary, and an attorney. With these three experts, focus on finding the right course of action for your money. They will be able to tell you where to deposit it, how to use it, where to invest it, etc.

All of this information is crucial. They’ll also be able to tell you how much of it can go to charitable causes, whether it’s your family or a different cause. Your accountant can explain to you the tax implications and help you go through the tax season with ease.

Furthermore, you might have to hire an investment specialist — again, it’s best to go for the best expert the money can buy. This is the case when you’re keen on investing your money, but you don’t know where. If you don’t want to invest, you don’t have to.

They will take you through setting up different funds, making the necessary payments, etc. Take their advice, and don’t make any decisions without them. Keep in mind that they should be skilled in working with people of your net-worth.

Pay Your Debt

Pay Your Debt

Hardly anyone is without debt. So, you’ll probably have some to pay off as well. Whether it’s student debt, loans, or anything similar, it should be paramount to you to pay it off before you buy a single new thing for yourself.

Imagine how much better you’ll feel, completely released from these troubles. Before you start paying these off, you should make a list of all the debt you know to have. Then, collect the phone numbers of these lenders and call them.

They should be able to tell you the final amount of debt that you have, and you should pay immediately. Then you get to have a fresh start with all of your new money. Then you can go on a shopping spree — within boundaries — and enjoy the prize you got. Enjoy your newfound financial freedom.

Set Up Funds

Set Up Funds

Once you pay off your debts, you should take the time to set up different funds for yourself and your closest family. Start with an emergency fund. If you don’t have one, open one and put enough money into it. An emergency fund is basically a certain amount of money that you have set aside for unexpected circumstances. For example, a sudden injury that requires medical care, a broken car part, etc.

Remember to use it only in absolute emergencies and avoid picking it up for things that don’t warrant it. Emergency funds are important because they allow you to get the money quickly — something that might be harder in other accounts.

You may think that this is silly, considering that you have a huge amount of money from the prize, but the fact is that you won’t keep it on you at all times and you’ll probably keep it somewhere safe. Safe places like those could be hard to pull money from.

This is something you can consult a financial advisor on.

Furthermore, you should set up your retirement as well. Naturally, most people will stop working, at least for a while, after winning the lottery. But the problem is, they don’t think of their old selves. You never know what can happen — you might spend all of that money before you reach old age.

As a bonus, a retirement fund can keep your money safe from the taxes.

So, it’s a good idea to save up money for your old age because you never know what can happen. Money gets spent, and you might end up without it, and without a viable career. Plus, as you get older, jobs get harder to find.

Having this safe amount of money put away is a cushion that will help you live in peace, knowing that you’ll be cared for once you get older. The savings for the retirement you put away will only grow, and you can’t use them freely until you get to retirement.

If you have children or grandchildren you’d like to take care off, you can make their life a lot easier by setting up college funds. This way, they won’t fall into debt because of their education, and they’ll be set up for a good life without that much worry once they finish college.

College funds are also good for taxes. Of course, you should consult with a professional about this subject before you do anything. Talk about what your options are and see what works best for you and your loved ones.


Winning a lottery is probably the luckiest and the most daunting moment in your life. You have to make smart decisions and be vigilant about who you meet, where you invest, and how you spend.

The most important thing, though, is to take some time to cool off. The first few months after winning a lottery will be pumped with adrenaline, littered with paparazzi, full of long-lost family, and lending requests. Your job is to fight it all off and think clearly. You’ve won a unique opportunity to be free of work and worries for your entire life — use it wisely.