Lotto Reaches $45 Million Jackpot: What Winners Should Know

Lotto has surged to a staggering $45 million jackpot for the upcoming draw on Wednesday, prompting excitement among potential winners. While many may envision lavish purchases and extravagant lifestyles, financial experts advise a more measured approach to managing newfound wealth.

Tim Fairbrother, a financial adviser from Rival Wealth, notes that winners often experience disbelief upon realizing their victory. For those playing online, Lotto sends a prize claim form directly, while winners with a physical ticket can present it at the retail location where it was purchased or visit the Lotto head office in Auckland. Typically, staff meet winners personally to discuss next steps, often celebrating the occasion with champagne.

Securing Your Ticket and Immediate Steps

Many winners carry their tickets for a time, grappling with the reality of their win. Fairbrother warns against discussing the win publicly before securing the ticket. “If you’re telling everyone that you won but haven’t secured your ticket, that can be a bit of a problem,” he explains. It is crucial to keep the ticket safe, particularly if not claiming the prize immediately.

Once a winner is ready to claim, Lotto recommends depositing the winnings into an interest-earning savings account. This allows for careful consideration of future financial decisions. If winners have questions about banking options, Lotto can provide contact details for a bank representative who specializes in handling large sums.

Choosing Who to Inform and Creating a Plan

Deciding whom to inform about the win is another critical step. Fairbrother stresses the importance of discretion. “If it becomes common knowledge, the money could change people,” he cautions. Friends and family may expect financial support, leading to pressure on winners.

Lotto encourages winners to create a financial plan. Setting clear goals and regularly revisiting them is essential. Fairbrother suggests working with an adviser to develop a strategy that aligns with personal aspirations. “Make sure you have the right accountant and lawyer to optimize your tax structure,” he adds.

Winners should reflect on their larger goals now that they have access to significant funds. Whether contemplating home renovations, investments in property, or simply enjoying life, having a structured approach can help manage wealth effectively.

Fairbrother advises caution with investments. Some may wish to invest in commercial real estate or residential developments, while others might prefer a managed portfolio. Understanding the difference between appreciating and depreciating assets is vital. He shares a cautionary tale of a past winner who quickly spent their fortune on luxury cars, only to see their value plummet.

Addressing Debt and Gifting Wisely

If the jackpot is less than $44 million, it often makes sense to pay off existing debts, particularly mortgages. This financial move can drastically change a winner’s future, allowing for savings rather than ongoing payments to banks.

Many winners feel compelled to share their wealth, especially with family. Fairbrother recommends considering an interest-free loan rather than outright gifts. This approach allows for financial flexibility and minimizes complications should circumstances change in the future.

In light of the significant amount of money involved, estate planning becomes crucial. Fairbrother emphasizes the importance of drafting a will to prevent disputes among heirs. “You’re not going to end up with your children arguing over promised inheritances,” he notes.

Lotto winners in New Zealand do not pay tax on their winnings, a significant advantage compared to other countries. However, it is essential to remember that while the prize itself is tax-free, any income generated from the winnings may impact eligibility for certain government support programs.

For those looking to stay informed about financial matters, Susan Edmunds offers a weekly newsletter, “Money with Susan Edmunds,” which covers various aspects of spending and investing.

As the draw approaches, potential winners should consider these insights to ensure that if they find themselves richer by $45 million, they are prepared to manage their wealth wisely and sustainably.