Actually win the lottery? These are some helpful first steps

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HUNTSVILLE, Ala. (WHNT)-- If you're like Carolyn Brown and play the lottery every week, you may spend a lot of time figuring out exactly what you'd do with all the money.

"I'm hoping to hit the big one!" she told us after buying a Powerball ticket Friday in Ardmore.

But if that actually happened, how would you react?

"I wouldn't know what to do, I wouldn't know what I would do at the time," said Terry Steele of Danville.

"I think it would be overwhelming, but I guess you could get used to it," remarked Brown.

The cash value for the Powerball was up to $496 million Friday evening. That's a lot of responsibility.  Joe Demos, a State Farm insurance agent, has an idea what would be a good first step should that sum suddenly become yours.

"The first thing I'd do is make sure I hold onto that ticket and get it into a safe place," he said.

Then, take a breath and relax. There's a lot of work ahead.

"Take a deep breath, calm down, go someplace private, and start putting together your team," he said. "You know, I call it the board of directors of your life. Your attorney, your accountant, your risk management adviser, your State Farm agent. Start planning what you're going to do with it."

Your trusted and vetted advisers can help you choose how to best protect that money and also, reduce the risk of losing it.

Demos joked, you may also want to find a way to protect yourself in case you get sudden interest from friends and family wanting a piece of the fortune.

"I'd hire a whole bunch of bodyguards," commented Brown.

You can't remain anonymous if you bought the ticket in Tennessee though. You actually have to come forward to claim your prize. Still, plenty tell us they are ready to shoulder the responsibility.

"Bring it on," said Steele.

State Farm also sent us these additional tips for lottery winners:

  • Secure your ticket. Make several copies of both sides to show your new lawyer and/or accountant (see below), and then lock the actual ticket away in a bank safe deposit box or a secure personal safe. Once you have a team of advisors in place, have them look over the rules and contract before you sign the original ticket — in some cases, signing your ticket might prevent you from creating a blind trust later.
  • Protect your privacy. As tempting as it may be to shout it from the rooftops and throw a huge "I won the lottery!" party, keep it as much to yourself as possible, especially before turning in your ticket. Some lotteries will require you to make your name public, give interviews, or show up at a press conference. If so, be sure to change your phone number and set up a new P.O. box beforehand to avoid being inundated with requests. You may also consider forming a blind trust through your attorney to anonymously receive the money, keeping your name out of the spotlight.
  • Lump sum or annuities? One of the first decisions you and your team will have to make is whether to take your winnings in one lump sum (usually around 60% of the total value) or have it paid out to you annually over a period of time. Long-term investments take financial wisdom and restraint, but with careful planning, you may be able to grow your lump-sum winnings larger than the future annuity payments would have been. However, if you need some structural help to keep from overspending too quickly, an annual payout is a solid, responsible way to make sure you'll continue to have income through most of your adult life.
  • Form a charity and giving plan. As soon as people find out you've hit it big, you're going to have to deal with a lot of financial requests from friends, family, and charities. Talk to your team about gifting taxation structures and how much you can give each year while still maintaining the lifestyle you desire. You may also consider forming an official charity foundation.
  • Bank it. Don't show up at the cashier counter with a check for millions — talk to the bank's upper management or private banking department ahead of time to discuss the best options for holding large amounts of money. Remember, the government only insures individual bank accounts up to $250,000, so think about spreading your wealth around multiple accounts and banks.
  • Set a budget. Silly, right? You have all the money you'd ever need — why do you need a budget? Actually, it's not silly at all. Sit down with your advisors and take a hard look at how much you really have after federal, state, and local taxes; what new annual expenses you'll have (for things like property taxes and upkeep and paying your financial team); and how much you want to give to charity. Think about future higher-education expenses for your family and how much you'll need in your golden years. Then set strict monthly and annual budgets for what's leftover and stick to them.