by John Darer CLU ChFC MSSC CeFT RSP CLTC
I'll admit that I bought 2 lottery tickets for the $365MM Powerball, unfortunately not from a certain lucky store in Lincoln Nebraska. While the media's saliva is dripping like a hungry mutt watching mama cook dinner, while it awaits the coming out of the mysterious winner, I thought some of the following information might be worth digesting.
70% of those who become "suddenly wealthy" squander it within a few short years
70% of those who become "suddenly wealthy" squander it within a few short years, according to the National Endowment for Financial Education. Moreover, about 1/3 of lottery winners eventually declare bankruptcy according to the Certified Financial Planners Board of Standards. What is absolutely astounding is the sheer amounts needlessly lost forever. And it didn't have to be!
Lottery winners, people who inherit large sums of money and plaintiffs in law suit settlements, or structured settlement payment recipients thinking of transferring structured settlement payment rights, pay careful attention to these statistics lest you end up one of them.
Proper planning and proper advice from qualified advisors can save you from making a fatal mistake with your money.
Learn from the mistakes of others. One former lottery winner quoted on AOL News today stated " I won the American Dream but I lost it. It was a very hard fall, It's called Rock bottom". She won millions and now lives in a trailer (not by choice)by gambling and inability to say "no" to the hand out requests of friends and family.
Structured settlements and trusts with spendthrift provisions (sometimes referred to as "Settlement Preservation Trusts" or Recovery Management Trusts) individually or in combination can be helpful to protect plaintiffs in personal injury law suits. Even plaintiffs in labor and other types of disputes can benefit from a non-qualified structured settlement, called a non-qualified assignment.
Alot of lottery winners opt for cash in lieu of an annuity. Some winners may want to rethink that (this new winner...can't he/she live on the $6.5MM-1st installment- for a while?) or at least consider creating some vehicles for spendthrift protection if they do take all cash.
If you, someone you represent as an attorney, or a loved one, is thinking of selling structured settlement payment rights or has been approached by a structured settlement factoring company wanting to buy your structured settlement payment rights for a deep discount.