Help -- We Won Lotto!

Dear Scott,

My partner and I are both age pensioners and we have just been confirmed as sharing a 1st division prize in lotto, which we never ever expected! Having worked and tried to make ends meet all our lives-- and not done the correct thing with money -- we do not want to make that mistake again. We are scared. What should we do?

David

I’ve helped quite a few lotto winners over the years, and I’d say that fear is a totally natural, healthy emotion to be feeling right now. Here’s what I’d do in your situation:

First, don’t tell anyone.

Second, seriously, don’t tell anyone. Trust me on this: nothing good will come from telling people that you’ve won the jackpot. It’ll make at least some of your friends envious, and it could cause your kids to plot to ‘granny grab’ their inheritance, rather than living their own lives.

(Speaking of which, seek out a lawyer to create an estate plan for you. Ask them about setting up a testamentary trust so you can have more control over who ends up with your loot.)

Third, since your winnings will be tax free but the earnings on them won’t be, talk to an accountant about the most tax-effective structure for investing your money. Hopefully you’ve already paid off your home, so I would suggest you splurge a little (keep it under the radar), give some away, put some aside for emergencies, and put the rest into good-quality shares.

Given you’re already retired pensioners, you’re not going to be able to put the money into super, and this windfall will affect the amount of Centrelink pension you get. But who cares, right? You’re rich!

Scott