If you won big on the lottery, first of all, congratulations! Most people can only dream of being so lucky. Most people also don’t understand the complicated financial decisions you have to make as soon as you cash in your ticket.
Most lotteries pay out in two ways: a lump sum payment or payments over time that are often paid through an annuity. At first glance, the choice may seem obvious—take the lump sum, right? Actually, there are reasons not to do so.
First of all, if you opt for the lump sum payment you will receive much less than the stated jackpot prize, which was calculated assuming annuity payments. You could lose thousands, if not millions, by opting for the lump sum payout.
Secondly, lottery winnings are treated as taxable income. Generally, the more income someone receives in one tax year, the more in taxes due. Federal income tax due could be as much as 40%, depending on the lump sum payment amount. This means a lump sum can result in a very large – and perhaps very unexpected – tax bill.
With this in mind, it’s not surprising that some lottery winners opt to receive their lottery jackpot winnings in the form of annuity payments over time, usually 25 to 30 years
Where a Lottery Annuity Falls Short
The periodic nature of a lottery annuity, however, leaves a large portion of your winnings sitting dormant, out of the winner’s reach until the payment due date rolls around. You can have millions in the annuity, and still not have the cash you need to achieve your financial goals.
Perhaps you want to buy a new house, or send a child to college. Maybe you have preexisting debts you’d like to wipe clear, or want to actively invest your winnings. It’s not unknown for a lottery winner to still have financial problems, all because his or her winnings are tied up in a fixed, inflexible annuity. The solution? Selling lottery payments in return for a lump sum payment.
Can I Sell My Lottery Payments?
The rules in the state where you won the lottery, not the state you live in, determine whether or not you can sell lottery payments. Sometimes it’s very clear whether or not you can sell, in other circumstances you may need the help of an attorney to determine if your lottery annuity payments can be put on the market.
If state laws allow, you can choose to sell lottery payments in batches, or sell the entirety of the annuity. Selling a portion of your lottery payments leaves you with a steady stream of income in the future, but selling the entire account frees up more cash more quickly.
Woodbridge Structured Finding, LLC has helped people sell their lottery payments since 1993, providing them with the lump sum payments they need to achieve their life goals and financial freedom. We guarantee we’ll beat any legitimate offer from our competitors, so call us today to discuss how best to sell your lottery annuity.