By Andrew Welsch
Sept. 8, 2025
Last week, the Powerball lottery jackpot reached $1.8 billion, making it the third-largest jackpot in U.S. lottery history, according to Powerball’s website.
The odds of winning the grand prize unfortunately aren’t in your favor—just one in 292 million, according to Powerball. Your odds of picking up a smaller prize are better, but far from a sure bet. For example, odds are one in 913,129 for the $50,000 prize.
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If you hit it big, the grand prize can be life-changing—but it comes with myriad challenges. Many big winners have encountered misfortune after making costly mistakes with their newfound wealth. Suddenly coming into a vast amount of wealth, whether it’s through the lotto or an inheritance, can introduce a lot of complex financial planning challenges. Barron’s asked money pros for their best tips to avoid pitfalls and ensure that a newfound fortune is a blessing, and not a curse.
If you hit the lucky number, UBS financial advisor Jason Katz suggests that the first thing you should do is write down all the things you want to do with your winnings—vacations to exotic locales, a new house, a luxury car—and then wait. Katz gives that advice to help clients avoid making rash decisions they may later regret.
Even with tremendous wealth you can blow through money faster than you realize. A fancy new home can come with considerable upkeep costs, for instance. And too often, lotto winners don’t think about the tax implications of impulsive decisions.
“I work with a lot of entertainers and athletes, and when they come into that first contract, the instinct can be to spend first and ask questions later,” he says. “But I often say, give it weeks if not months before making a major decision.”
Gather a team of experts. Another piece of advice: Consider assembling a team of experts to help you. That group would include a financial advisor, an accountant, and an estate planning lawyer. Don’t rely on a friend or family member to manage your money. You want independent, fiduciary advice that is in your best interest.
A financial advisor can handle the minutiae of your portfolios and develop a financial plan that can help you achieve that wish list you wrote down on day one. An advisor can also act as a check on any long lost friends or distant relatives who inevitably come out of the woodwork to ask you to invest in their harebrained investment ideas.
“You need a system of checks and balances,” says Matthew Chancey, a certified financial planner and tax planning consultant for high-net-worth individuals. “A tax person, an investment person, an insurance person, and a legal person should all make up your team,” he says “Work with the team jointly to make balanced decisions. I would personally hire people that bring each skill to the table to make sure to have contrasting perspectives so as to minimize conflicts of interest as much as possible.”
Having a team of experts can also be particularly helpful for clients who haven’t developed in-depth money management and personal finance skills. “They don’t know what they don’t know,” Chancey says.
Pick a payment plan. If you have a winning ticket, you will have to choose between taking a smaller immediate and one-time lump sum (estimated at $826.4 million) or the full amount in 30 annual payments. There isn’t necessarily a right choice here.
“The lump sum or the annuity is about personal preference and your own level of financial skills,” Chancey says. “The lump sum sounds great, but you have to learn everything at once and any mistakes could be catastrophic. The annuity lets you sharpen skills over time and if you make some huge mistakes early with the first few payments hopefully you learn from those and make better decisions in the future. I think the annuity is more forgiving for most winners.”
Katz generally leans toward a lump-sum payment, quoting the aphorism that a bird in the hand is better than two in the bush. He adds that it can make some financial planning easier and avoids the unlikely possibility that payments couldn’t be met for some reason in the future.
Get an estate and financial plan, pronto. You’ll want to get started on your estate planning, and hire appropriate lawyers and planners to handle the details. One reason to do so is to avoid unnecessary taxes in the event of your death, but an equally important one is to avoid unnecessary confusion and strife among your potential heirs.
An advisor can help you craft a financial plan to ensure you meet your goals, invest prudently, and manage your cash flows. As Barron’s noted in 2022, when the jackpot for the Mega Millions lottery climbed to $1.28 billion, it can be tempting to view a massive windfall as forever money. But without a plan to manage the cash flow, even unfathomable wealth can dissipate quickly. When the author Ernest Hemingway was asked how he became bankrupt, he reportedly said: “Two ways. Gradually, then suddenly.”
Smart ways to gift. Many wealthy individuals set up charitable foundations to give away part of their wealth. If you are charitably minded, you can also put money in a donor-advised fund, which may give you a tax break if you do it the year in which you win the lotto. Money in a DAF can be invested and continue to grow, and the owner can choose to transfer the funds at a later date. So there’s no immediate pressure to pick what causes you want to support.
If you live in a state that allows you to claim the prize anonymously, do so. A reason to do this is to avoid unnecessary attention. Friends and family members may start hitting you up for money. Some states allow lotto players to claim their prize as a trust or other legal entity, according to Powerball’s website. That’s another reason to get a team of experts to help you. After all, you don’t want to just become wealthy. You want to stay that way, and be happy too.
Write to Andrew Welsch at andrew.welsch@barrons.com
This Barron's article was legally licensed by AdvisorStream.
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