You've won the Powerball -- now what?

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Some incredibly lucky people in Arizona and Missouri are going to have a very merry Christmas.

The holders of two tickets had the good fortune of picking all six winning numbers in one of the biggest Powerball jackpots in history -- a staggering $587.5 million.

It could be a while before the winners, who have yet to come forward, actually claim the prizes. Both states give winners until May 27, 2013 -- 180 days -- to present their tickets before the prizes expire.

In the meantime, financial experts have a few nuggets of advice for these newly minted millionaires (and any other lottery winners) to help them avoid becoming yet another riches-to-rags story.

First of all, hold onto a winning ticket. Stash it in a fireproof home safe or a bank safe deposit box. And don't share the news with anyone, especially if you plan on keeping that ticket in a home safe.

Next, get a team of financial professionals in place. Winners need a certified public accountant, a lawyer and a team of financial advisers.

"The key is to make sure you have multiple sets of eyes watching everybody," said Andrew Stoltmann, a Chicago-based securities lawyer. "The problem is when you have one person -- a financial adviser or a CPA -- being responsible for everything. That's when problems pop up."

Mr. Stoltmann added another word of caution. "Once that ticket is turned in and you have the check, you shouldn't deposit it in the local bank," he said. "The FDIC limits [$250,000 per account] would only cover a fraction of the prize if the bank goes under."

Instead, he suggests taking the Powerball check to a very large brokerage firm, such as Goldman Sachs or Merrill Lynch, which are institutions the government feels are too big to fail.

More money often means more problems.

Maybe it was not a concern in the past for winners, but now Carrie Coghill, president and CEO of Coghill Investment Strategies, Downtown, said the Powerball winners will need to worry about the much talked about fiscal cliff.

There is a good likelihood the winners will be affected by the steep tax increases that will take place Dec. 31 if members of Congress take no action to extend tax breaks in place for high-income earners -- which definitely describes these jackpot winners.

The top tax rate is set to jump from 35 percent to 39.6 percent, no small chunk of change when hundreds of millions in income is at stake. Ms. Coghill says the Powerball winners may want to consider cashing in their ticket sooner rather than later to avoid making Uncle Sam a bigger beneficiary than need be.

The Pennsylvania Lottery also reported Thursday that it sold three winning Powerball tickets worth $1 million each in Wednesday's drawing. Each ticket matched all five white balls, but not the red Powerball.

Those $1 million tickets were sold in Altoona, Blair County; Cabot, Butler County; and Wynnewood, Montgomery County.

The Powerball winners will likely want to quit their day jobs, but Eric Tyson, author of "Investing For Dummies," noted life goes on. If they do quit, they need to give lots of thought to what they want to do with the rest of their lives.

"Everyone likes the idea of being instantly rich, having anything you want and never having to work," he said. "But most people overlook the enormous responsibility and the potential downside of instant wealth. I would take things slowly, and recognize you will need a lot of education as well as potential advisers."

Beware of jealousy and envy, too.

"You need to understand how people who know you will be affected by the news," Mr. Tyson said. "Some people may expect you will do things for them. You may feel obligated to share with people you care about. But you need to take time to think through what you want to do with the money."

Beth D. Lynch, of Schneider Downs Wealth Management in the Strip District, urged winners to watch out for family members and friends who come out of the woodwork with their hands out. She said the lottery winners also should consider making conservative investments.

"Even if they decide to only put some of the money in CDs and municipal bonds, they could live off the interest," she said. "Even at today's low rates, that would still be possible, considering the amount of money that is involved."

Kate Byrne, a senior wealth manager at PNC Wealth Management, Downtown, said advisers there often work with people who have received multimillion- dollar personal injury settlements, unexpected inheritances and farmers who suddenly end up with more money than they ever dreamed after signing agreements with Marcellus Shale natural gas producers.

She suggested that instead of taking the state annuity payments, lottery winners should take the lump sum payout because they can buy a private annuity that pays more.

Although more than 90 percent of winners take the lump sum, Mr. Stoltmann still believes it is best not to, at least at first.

"If you make the common catacylsmic mistakes that so many lottery winners make the first year, you've got major problems," he said. "Whereas if you take the payments over 25 years, you can make those bad mistakes and have 23 or 24 more years to go.

"There are studies showing 70 percent of lottery winners have no money left after seven years. If you have payments coming to you over 25 years, you will be in good shape."

The numbers drawn Wednesday night were 5, 16, 22, 23, 29 and the Powerball was 6.


Tim Grant: or 412-263-1591.


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