The Mega Millions jackpot increases to $ 850 million. How to deal with a windfall

Again, the Mega Millions jackpot has catapulted higher.

The top prize is now a whopping $ 850 million – the third largest in lottery history – after not a single ticket that matches all the numbers drawn Friday night. Then there’s Powerball: the jackpot is estimated to be $ 640 million for Saturday night’s draw.

Of course, the odds of winning either game aren’t in your favor: the odds of a single ticket matching all six numbers are 1 in 302 million for Mega Millions and 1 in 292 million for Powerball.

Nevertheless, it is still worth considering how you would deal with such a windfall if you beat the odds.

Jackpot winners are usually given six months to a year to claim their prize, depending on the state where it was purchased. This generally means there is no need to rush to the lottery headquarters.

In other words, winners need to take a deep breath.

Whoever ultimately wins one of the jackpots should be prepared for a rollercoaster of emotions.

Experts say once the initial excitement of winning the jackpot diminishes, the magnitude of their windfall may decrease.

“For anyone experiencing newly created wealth … there are feelings of disruption and a sense of overwhelm,” said Valerie Galinskaya, a general manager and head of the Merrill Center for Family Wealth.

You don’t have to do it alone, of course.

Given the sheer size of these jackpots, winners must assemble a team of experienced professionals – including an attorney, CPA, and financial advisor – to help them navigate the windfall.

“You want to hire the right consultants who can not only provide good advice, but also advice tailored to your needs and wishes,” said Galinskaya.

Make a copy of your ticket, keep it in a safe place – that is, in a lockbox or safe at a bank – and resist the urge to share your news with everyone in your life.

“Don’t speak up to people right away except your close and trusted family,” said certified financial planner Jim Shagawat, a New Jersey-based associate consultant with Los Angeles-based AdvicePeriod.

In addition, if possible, you should protect your identity when you claim the jackpot. While it is standard advice to sign the back of the ticket, it may interfere with remaining anonymous if state laws allow you to form a trust or limited liability company to claim the windfall instead of doing so in your own name to do.

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If your state laws require your name to be announced publicly, it’s worth preparing how to respond when others bring up your windfall in conversation, Galinskaya said.

You say, ‘I am very grateful, and we are still working on what it means to us,’ she said.

For the $ 850 million Mega Millions jackpot, the cash option – which most winners choose instead of an annuity – is $ 628.2 million.

Before you get to that, though, 24% – or $ 150.8 million – is withheld for federal taxes. You can also count on owing Uncle Sam a lot more because of the top marginal rate of 37% that applies to an income of more than $ 523,600 for individual tax returns and $ 628,300 for married couples filing jointly. State taxes are also usually payable.

For Powerball’s jackpot of $ 640 million, the option is suddenly $ 478.7 million. The 24% withholding would be approximately $ 114.9 million. And again, more was to come.

One way to lower your tax bill is to think charitable. Basically, the government gives you a tax break if you use private money to do the public good.

“It’s not just about what you want to do for yourself and your family, it’s also about philanthropic,” said Galinskaya.

You can contribute cash, up to 60% of your adjusted gross income, to a public charity or donor-advised fund and get a tax deduction for the amount in the year you make the donation. You can also create a private foundation, donate income to it, and then determine how you will use it over time.