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Forbes Magazine’s top 10 tips for lottery winners: Part 1 – March 12th 2012

Lottery jackpots are the main reason the vast majority of fans enter their favourite draws, but what happens when one of these hopeful players actually wins the top payout?

Help is at hand for those who suddenly find themselves with millions in the bank and the world at their feet – and where best to seek advice than from the publication that prints the list of the world’s wealthiest people year on year?

Forbes magazine has listed ten things for lotto winners to remember, which could help keep lucky players from frittering away their money or making purchases they later regret – and in the first of a two-part series we look at tips one to five.

1. See a tax professional before coming forward

Tax can be something lottery winners have to deal with if they win big, as the US  jackpots tend to be subject to these levies.

Therefore, before going forward it is advisable for people to seek the expertise of a tax professional to see whether a lump sum payment or an annuity would be the better option to take when it comes to receiving the money.

2. Avoid sudden lifestyle changes

Experts suggest that in the first six months of winning, people do not do anything drastic like quit their job or buy a mansion and should set aside a fixed amount for smaller-scale splurges to celebrate.

3. Consider anonymity

Some lotteries do not permit anonymity, but if it is an option it is recommended that people consider it, or protect their identity by setting up a trust and collecting the winnings in the name of this account.

4. Pay off your debts

There is no better investment than paying off your debts and with today’s yields, getting rid of all your owings is good advice, as when you invest your lottery money it is less of a sure thing that it will grow or shrink than cancelling out funds that need repaying.

5. Have a budget

Living with millions in winnings takes discipline and so a budget can be very useful.

Dennis Belcher, a lawyer with McGuire Woods inVermont, told Forbes: “It takes a lot of principal to generate income and once you start spending, the principal quickly dissipates.”