Tuesday, March 6, 2012

If I Had $336 Million, I Would

The title of this post is best sung to the tune of that Barenaked Ladies song.

Anyway.  This is on my mind because Someone in Rhode Island, who has not yet come forward, won that amount of money in the Powerball lottery over the weekend.  They're expected to come forward today to claim their winnings.

Good for them, I say.

However.  You know how you're given the opportunity to take a one lump payment or take monthly/yearly payments?  The lump sum is nice because you get your instant millions and you don't have to wait around for a "paycheck".

For example, Holly Lahti from Idaho won a $380 million dollar lottery.  She opted to take the lump sum. That lump sum instantly turned into $120 million dollars. Right off the top $260 million disappeared.  Why?

After that, the fed withheld $30 million in taxesThen, the Idaho State Tax Commission took $9.3 million leaving the "winner" with $80.7 million in winnings.  I'm not saying I would scoff at 80 million bucks...but where did all that money go?  Where did that initial 260 million dollars go?  Basically, she won nearly four hundred million dollars, but went home with 80.

Doesn't that seem odd?

I'm no lawyer, so I don't know if that's the best strategy.  I assume these winners talk to lawyers and are advised to take the lump sum.  Perhaps the thinking is that one could die tomorrow and never see another payment again.  Or they're talked into the thinking that...well, "You didn't have $80 million twenty four hours ago...why would you turn down $80 million?"

Or perhaps the payments, after each check getting taxed, doesn't turn out to be that much closer to the initial winnings anyway.  I don't really know

I honestly think I would take the payments.  I wouldn't go skydiving or basejumping or cave spelunking or try to fly off a cliff or something...basically I'd be pretty damn careful to make sure I got every damn dime.

I'd like to hear from anyone with some knowledge of this matter to tell me why the majority of winner always seem to take the lump sum.  Other than the obvious instant check for a bunch of millions...why give away so much?  I have no doubt that states put that $260 million to great use, like filling potholes, fixing bridges, improving mass transit, trimming branches, cleaning the town parks, maybe hiring a cop or...oh who the hell am I kidding?  They hide that money in "other funds" slice and cook it away, bet on it.

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