With $68 million up for grabs on Wednesday night in the Lotto 6/49 Gold Ball draw, there will be a lot of Canadians waiting to check their numbers once the lucky draw is made.
But once that gold ball has been dropped —and according to lottery officials it is guaranteed someone will win the $68 million — what should the lucky winner or winners do?
Well, according to Stephan Desbiens of Exponent Investment Management, the very first thing to do is stop, think and breathe given you have a big influx of cash coming in.
“Just to try to really understand the moment that you’re in and possibly how things could really impact the rest of your life,” he said in an interview with Global News on Wednesday.
Then, sign your ticket and store it somewhere safe because there will be some additional things you’re going to want to do first before cashing the winning slip of paper.
Given you’re about to come into an influx of money, Frank Hounjet with Virtus Group said you should contact your attorney, accountant and financial planner so you can plan out what you’ll do with the new funding, while also working to prevent legal issues that could arise.
In doing so, you can also start to plan for the resulting publicity and potential solicitations you could get from not just friends, charities and scammers, but even family members.
“So essentially trying to figure out how you want to deal those winnings, how you want to plan out your needs for retirement, what you want to donate and give way to family, friends,” he said.
“What you might find is that after when you’ll find yourself with a lot of new friends and maybe some new family members that come out of the woodwork. So it’s very important to have that plan in place and basically execute on those lines and really supporting afterward.”
Once you feel you’ve made a suitable plan for managing the money, it’s time to finally cash that prize but you should be aware that expectation of privacy is likely going to disappear once you do.
Most lottery corporations, like the Ontario Lottery and Gaming Corporation (OLG), have the right to publish wins on their website with most also posting a photo of the winner for one year after the prize is claimed.
It’s why Desbiens suggests it might not hurt to take some time away.
“The getting away part, whether it’s a trip or just shutting yourself out of of the limelight, is because the limelight will probably last for a few months,” he said.
With that extra publicity means you should also consider interviewing more advisers to help you because, as Hounjet said, while your current lawyer or accountant could be good at real estate transactions or preparing a tax return, they may not be able to advise on estate planning or a family trust that could come into play with the winnings.
“As your life gets complicated, you might need the help of a more specialized professional to help manage those areas,” he said.
Speaking of taxes, Canadians may have often heard of U.S. lottery winners paying substantial amounts in tax on their winnings.
The good news is that in Canada, winnings are not taxed as they are considered to be “windfalls” — which are considered to be unexpected payments that can also include gifts or inheritances.
According to TurboTax, an online platform that allows Canadians to file their taxes on their own, it notes everything from a local hockey team’s 50/50 draw to Lotto 6/49 are not subject to tax.
However, the Canada Revenue Agency (CRA) does warn while the winnings are not taxed, any income that money generates if it’s invested in a non-registered investment or account — such as stocks or mutual funds that accrue interest or dividends — would result in Canadians having to pay tax.
TurboTax advises if winnings are planned to be invested, a Tax Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) should be considered if there is contribution room.
“As your financial life gets more complicated, the tax aspects also get more complicated. So a good accountant will help you navigate those waters,” Hounjet said.
While a lottery win can come with stress, both Desbiens and Hounjet stress Canadians should be sure to take care of their health both physically and mentally because it’s difficult to enjoy that wealth and time with loved ones if ill.
Desbiens adds one additional benefit to a lottery win — aside from an influx of cash — is it can help restore your “life balance.”
Whether this is through quitting a job you don’t like, going out and travelling or staying connected with people you love, it can be a jackpot to your own life.
“Staying connected is an important part of financial well-being and your health,” he said. “So don’t break that connection just because you feel like you should be doing more with your money to enjoy it.”
He suggests people who love their job should, however, think twice about quitting as there is the potential it won’t be there if you choose to return.
So if you win a lottery jackpot, it’s better to speak with those you work with about needing a break rather than just outright quitting so you can continue to do the things you love.
The other difficulty Canadians can face when winning the lottery is how to go about potentially gifting it to family and friends.
Hounjet says it’s why coming up with a well-defined plan after winning can help.
“Essentially you could have an annual budget for donations and perhaps even an annual budget for assisting family and friends,” he said. “So you’ve got that set dollar pool that’s already been allocated, you need to stick within that pool.”
According to Desbiens, he’s had some clients who have perhaps made promises early on or even transferred money to family that then had to be called back, creating tension. He said it’s why he encourages not making any big decisions in the first year and expressing that to those you love.
“Those that you want to take care of, know that they’re going to be taken care of and you can help them out a little bit in the short term and let them know that they’re going to be just fine and that, you know, you plan to be generous and that things will will fall into place nicely,” he said.
In the end, Hounjet said the most important thing when winning the lottery is to stay grounded.
“Keeping that calm, cool and collected head will really go a long way to to all aspects in terms of mitigating any issues and planning properly for the future and also staying grounded.”
