Lottery wins are life-changing sums of money, without question – so life changing that most lotto winners are unprepared for how quickly these changes transpire, and the choices one needs to make to cope with them. From the moment your number is called, a series of life-changing events start to take place in quick succession, which is why it’s ideal to have an idea of what to do if you actually win the lottery.
When it comes to lottery winnings in Canada in particular, what steps you need to take next and even the laws of the land greatly vary from what you’d expect in other countries. If you’re counting on winning the lotto one day and just want to imagine what comes next if that happens, then look no further as we give you a primer on what to do if you win the lottery.
If you were lucky enough to win, what would you do with your lottery windfall?
Sign and then seal your ticket
Your ticket doesn’t belong to you until you’ve signed it . Our first advice for lottery winners may seem obvious, but it’s something you might forget to do in the adrenaline rush of having just won the lottery. Your ticket belongs to you only if you sign it, so take a hold on the celebration to autograph your ticket and prevent the misfortune of having it stolen. Once you sign your ticket, however, you don’t need to cash it in immediately.
Refer to the rules of the lottery you’ve just won, and check for just how much time your ticket remains valid. The wait to cash in your ticket may be painful, but the time you spend now will largely dictate whether you become one of the majority of lottery winners who lose all their winnings in five years, or someone who wins the game of life after winning the lottery. Once you sign your ticket, make sure to seal it under lock and key in the most secure place known to you. After doing that, it’s time to hurry and follow the next steps listed in this guide.
Hire actual advisors
This article is just a primer on what to expect once you’ve won the lottery. Our biggest piece of advice for lottery winners in Canada is to get actual experts and brief them on your windfall. You will need to hire a financial advisor who specializes in estate planning, an accountant, and an attorney who works with high net worth individuals – because guess what, that’s what you will be once you win the lottery.
Your team of advisors – led by your attorney – will provide you with options to preserve your anonymity, such as creating a trust fund or a limited liability company (LLC) to stay under the radar to any extent you can. This team will also help you create a plan for the immediate, medium, and long terms – to make sure that winning the lottery is just the first step on a long journey of wealth creation. Most importantly, they will advise you on important questions like how much tax you have to pay on lottery winnings. Work with your team to develop this plan, and also prepare your response for when your family and friends inevitably ask for a slice of the pie.
Don’t break the news
While it’s tempting to stand on top of the world and declare your newfound fortune, resist this temptation if you want a greater chance of actually keeping your winnings in the long term. Inform only one person if you must – which could be a partner or a parent. We don’t advise telling your friends about windfall, no matter how close to you they are; besides, they’ll understand if they’re really that close to you. While there is a certain inevitability to being publicly outed as a lottery winner, there are several intelligent steps you can take to minimize the impact – starting with telling no one but your partner and advisory team.
Plan your estate
You didn’t have an estate yesterday, but you definitely will have one tomorrow. Work with your team of advisors to make sound financial decisions to keep yourself secure for the long term. While you should celebrate your win with some amount of splurging, have this amount determined by your financial advisor and stick to it. Don’t purchase an eight-bedroom mansion with multiple swimming pools and acres of lush, green space. Maintaining this property will cost you all your winnings over time, after which you’ll need to sell.
Temporarily delete your social media
The time has come to cash in your ticket, after thoroughly planning your future with your advisors and dearest. Unfortunately, lottery winners in Canada are almost always announced publicly – and it’s highly likely that your winnings will soon be known to one and all. Organizers do this to ensure the integrity and transparency of the competition – but that doesn’t help you at all.
However, there are several steps you can and must take to protect your anonymity to any degree possible. One of those steps is to delete your social media temporarily, so that you can’t easily be contacted once the organizer’s page uploads a picture of you grinning and holding up a giant cardboard cheque. Wait for a few days until the buzz dies down, and then make your way back to social media like nothing ever happened.
Once you have your winnings, you might be wondering what to do next?
Don’t quit your job impulsively
Instead, take a modest vacation first. This serves the purpose of giving you a chance at protecting your privacy until the news dies down, while also giving you the time to reflect on certain decisions you need to make – such as quitting your job. Do you really, really hate your job? Is it worth giving up the financial security of a regular income, or would you rather rely on your investment gains as a supplement to your regular income? These are decisions to be made with your advisory team, and then reflected on earnestly in silence. They certainly mustn’t be made impulsively.
Stick to the plan, and learn to say ‘no’
From this point onwards, sticking to the plan created by your advisors should be the best way to proceed with life after the lottery. Remember that while gifting money to your nearest and dearest is something you could budget for, it’s time to practice your ‘no’ for when you meet others asking for a handout – out of which, sadly, some could try to scam you. With a slightly public reputation for being a newly made high net worth individual, comes several people who will try to lure you with dubious ‘investments’ and false pleas for charity. Always lean back on your advisory team to vet any investment decision you’re planning to make.
Frequently Asked Questions
We hope that this article has helped you be a little better prepared for when you might win the lottery. In the FAQ below, you will find answers to additional questions you might have.
What happens when you win the lottery?
Winning the lottery presents you with a series of decisions you need to make that you never thought you’d need to make before. Plan your estate, protect your privacy, and hire advisors who can help you manage your new winnings.
How much tax do you have to pay on lottery?
Lottery winnings in Canada come with zero tax liability. Your winnings are all yours. This makes Canada’s laws similar to a small group of countries that charge no taxes on gambling windfalls. All the same, we still recommend that you hire some financial advisors
How do I win the lottery?
Deliberately winning a lottery is all but impossible. The only thing you can do is increase your probability of winning by investing in multiple lotteries. To read more about how lotteries work, click here.
