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When you win the U.S. lottery what happens?

Winning the lottery is a dream come true for many people. With jackpots often reaching into the hundreds of millions or even billions of dollars, it’s no wonder that buying a lottery ticket gives people a rush of anticipation and daydreams about what they would do with such a massive windfall.

But winning the lottery also brings some big responsibilities and major life changes along with the big check. Here’s an overview of what happens when you win really big in the lottery in the United States.

You Don’t Automatically Get the Full Jackpot Amount

If you are the sole winner of a giant jackpot, you won’t automatically walk away with the full amount advertised. That’s because of both federal and state taxes on lottery winnings.

For federal taxes, the IRS immediately takes 24% off your winnings right off the top before you ever see a dime. Many states also tax lottery winnings between 5-8%, taking their cut too. Only a handful of U.S. states have no state tax on lottery winnings, like Florida, Texas, South Dakota, Tennessee, Washington, and Wyoming.

So if you win a $1 billion Mega Millions or Powerball jackpot, about a quarter of it, around $250 million, immediately goes to paying your federal taxes. State taxes could take another $40+ million. So now your billion-dollar win is down to around $700 million just from taxes.

You Can Take the Money in a Lump Sum or Annually

For giant lottery jackpots, winners have a choice in how they receive their winnings.

You can take the entire amount remaining after taxes up front in one immediate lump-sum payment. This option provides instant cash in hand but cuts how much you actually get after more taxes.

Or you can opt to receive your full prize amount in an annuity, meaning it’s paid out in yearly installments over 29 years. This avoids more taxes up front but spreads out your winnings over decades.

For a headline billion-dollar jackpot, the cash value option might be around $500 million after federal and some state taxes. But if you take the annuity, you would get the full amount after taxes of $700+ million paid annually over 29 years. That works out to around $25 million per year before additional taxes.

You May Be Publicly Identified

In almost all states, lottery winners cannot remain anonymous. Their names are made public by state lottery officials upon winning and claiming a jackpot prize.

Only about a half dozen states allow lottery winners to request anonymity and keep their names out of the public announcements about big lottery winners. Those states that allow anonymity are Delaware, Kansas, Maryland, Ohio, North Dakota, and South Carolina.

The rules for remaining anonymous vary by state. In some states, you would need to claim your winnings through a trust or legal entity like an LLC to avoid using your real individual name. A lawyer can advise you on the process.

But in most states, your name and hometown will be made public upon winning a noteworthy lottery prize. This means you may be inundated with requests for money from strangers, solicitation letters, scams, and people looking for handouts from your new fortune.

You Need to Protect Yourself From Security Threats

The moment your name appears announcing your multi-million dollar lottery win, you become a target. Criminals, scammers, long lost “relatives”, and predatory strangers will all come looking to separate you from your money by any means necessary.

Major security measures are needed immediately before claiming your prize. Physical security like bodyguards, home security systems, and personal protection may be warranted. Monitoring your financial accounts for fraud will also become much more crucial.

It’s highly recommended to work with professionals like lawyers, accountants, financial advisors, and security experts. Their guidance can help shield you from threats looking to take advantage of lottery winners.

You Should Set Up a Trust

To protect your identity (if possible) and better manage your lottery wealth, experts almost universally advise setting up a trust.

An anonymous trust can claim your lottery winnings while keeping your name out of the public. Even in states that don’t allow anonymity, a trust can create some separation between you and your money.

A trust also avoids having to share info about your assets and distributions when applying for benefits like Medicaid. And it can provide some lawsuit protection by placing your winnings in the trust’s name rather than yours individually.

Trusts can help you better mange your wealth through investment plans and managed distributions. They also allow you to control how your money is passed on to heirs after your death.

Setting up a solid trust is a priority step to take when lottery riches come your way. The right trustees are also key, like professionals, lawyers, and financial experts to manage the trust and your new fortune responsibly.

It May Take Weeks or Months to Get Your Money

Don’t expect to instantly have hundreds of millions of dollars in your bank account on the day you win the lottery.

It takes time for lottery officials to confirm the validity of your ticket and process your winnings. You may need to make a public appearance when claiming the prize. And taxes have to be sorted out to determine your final lump sum or first annual payment.

The entire process from winning the drawing to getting your first payment can take 4-6 weeks at minimum. Setting up structures to claim and manage the money like a trust can also add more time.

And if you opt for annual annuity payments, you’ll have to wait until the following year to receive your second installment. So patience is key when waiting to get your big winnings.

You’ll Need to Make Big Financial Decisions

Suddenly coming into hundreds of millions of dollars all at once requires some huge financial decisions.

First, you’ll want to make sure you have the best team in place. That means meeting with top financial planners, accountants, investment advisors, tax strategists, and lawyers. Their guidance can set you up to make the smartest decisions.

Some of the big choices include:

  • Choosing lump sum or annuity payments
  • Selecting conservative investments to protect your capital
  • Hiring a wealth manager or money manager
  • Setting up trusts and legal entities to manage the money
  • Funding college savings accounts or trusts for children/family
  • Making a plan for charitable giving based on your interests
  • Deciding whether to keep working or retire

Having a coordinated plan in place with your advisory team can help you navigate these major financial decisions wisely in the wake of a lottery windfall.

You May Be Bombarded With Requests for Money

When word gets out about your lottery fortune, endless requests for money will come flooding in.

Long lost relatives you never knew existed may come asking for help. Charities will flood you with appeals to fund their cause. Your high school or college will hit you up for a new building or stadium. Friends and others may also approach asking for loans, investments, or donations.

Fending off these money requests while maintaining your relationships takes diplomacy and firmness. It’s wise to work with your advisors to create some guidelines on giving that take into account your values and goals.

Having professionals help filter incoming requests can also let you avoid getting bombarded personally. Setting up a donor-advised fund through a community foundation is one way to responsibly field charitable giving opportunities.

Your Relationships May Change

When you suddenly become incredibly wealthy, it can impact personal relationships with family and friends. Some effects may be positive, others may strain ties or cause jealousy.

Marriages can suffer from fights over money or tensions about how to handle the wealth. Spouses may disagree on whether to share, invest, or indulge in luxuries. In-laws might also cause issues by demanding handouts.

Friendships can change too if envy or drive a wedge between you and those without similar fortunes. Certain friends or partners may even become manipulative or dishonest in trying to access your winnings.

Having open, ongoing conversations with family and friends can help preserve important relationships in your life post-lottery win. And being selective about who you share details with regarding your wealth can also help avoid strained ties.

You’ll Need to Manage Stress and Emotions

A sudden influx of incredible riches from winning the lottery can be mentally and emotionally overwhelming.

Anxiety about how to handle the money responsibly, guilt over lavish purchases, constantly being approached by people asking for help, losing the structure of work, and strained relationships can all take a toll.

Seeking out mental health support can be helpful for processing this life change in a healthy way. Speaking with a therapist or counselor can provide an outlet to manage the stress.

Joining a support group with other past lottery winners who understand the experience can also give you perspective. Making time for self-care, personal growth, and focusing on your purpose can also help you avoid some of the emotional pitfalls lottery winners sometimes face.

You Can Indulge Some Dreams and Desires

Of course, a huge perk of winning the lottery is having the freedom and funds to fulfill some long-held dreams and desires!

While the bulk of your winnings should go toward investment, savings, security, taxes, and charitable goals, there’s room to indulge a bit in the lottery fantasy life.

Some of the dream purchases lottery winners often splurge on include:

  • Luxury homes, condos, or land
  • Sports cars and vehicles
  • First class travel and dream vacations
  • Jewelry, designer clothes, and shopping sprees
  • Paying off debts for themselves and family/friends
  • Making beloved friends/family financially secure

Just be sure to set limits and have a plan in place for bigger purchases with guidance from your financial team. And steer clear of freeloading friends looking for handouts versus those meaningful to you.

You Can Make a Difference With Philanthropy

For many lottery winners, one of the biggest benefits of their new fortune is the ability it provides to make a difference through philanthropy.

Giving back through donations to worthwhile causes brings meaning to wealth for many winners. With proper planning, you can fund impactful nonprofits, educational initiatives, medical advances, environmental projects, and more that align with your values.

Some tips for maximizing philanthropy with lottery winnings include:

  • Set long-term giving goals for causes meaningful to you
  • Research organizations and programs to fund wisely
  • Connect with community foundations for advice
  • Consider starting a donor-advised fund for efficient giving
  • Talk to philanthropic advisors to create a giving strategy

Giving strategically based on your passions and interests can create a meaningful legacy from your lottery good fortune.

You Can Invest in Your Family’s Future

Setting up your loved ones for generations to come is a dream many lottery winners share. With proper wealth management, you can use your lottery funds to secure your family’s financial future.

Options for providing for heirs include:

  • Setting up trusts to pay out annually or at certain ages
  • Funding college savings accounts for grandchildren
  • Paying off mortgages/debts for immediate family
  • Making siblings/children silent partners in investments
  • Buying income property to provide ongoing income
  • Gifting funds annually up to tax-free limits

Estate planning with qualified legal counsel can help you pass a lottery fortune to heirs while minimizing estate taxes in the future.

The key is striking the right balance between providing security for family versus raising entitled dependents. With guidance from your team, investing lottery wealth can nurture future generations in a positive way.


Winning a massive lottery jackpot can provide amazing opportunities that completely transform your life. But along with the windfall comes major responsibilities and planning needs to manage your wealth responsibly.

By working with experienced advisors, establishing structures like trusts, staying grounded, and focusing on your goals and values, your lottery fortune can create meaningful impact for you and those you care about for years to come.