I'm a lottery lawyer - the curse is real, people regularly walk away with half after the state gets

A LOTTERY lawyer has revealed the best option for winners faced with two choices when they land the jackpot; to take the cash immediately or spread out over a number of years.

Andrew Stoltmann, a lawyer based in Chicago, said 90 percent of lottery winners take the money immediately, which is a big mistake.

Stoltmann has represented at least 10 jackpot winners in his legal career and said spreading out your lottery payments gives you time to put your entire financial team together to use the money wisely.

“Few lottery winners have the infrastructure in place to manage a lottery windfall,” he told CNBC.

This team could include an accountant, financial advisor, and an attorney Stoltmann said.

Even if a financial team isn't in order, spreading out the payments allows for room to make mistakes, whether that be poor investments or large purchases.

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“To make a mistake with the first year’s winnings is not catastrophic if the winner is going to receive another 29 years’ worth of payments,” Stoltmann said to CNBC.

Stoltmann has witnessed several "lottery losers," blow through millions of dollars if they took all the cash up front.

Taxes can also be a problem for lottery winners as they have to report both federal and state taxes on it whether they take all the cash at once or not.

Regardless of either option, the IRS takes a minimum of 24 percent federal withholding tax upfront on lottery winnings.

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Not all states tax lottery winnings, but a couple do with New York taking 10.9 percent, the highest state percentage according to LotteryUSA.

A 2018 USA Today analysis recommended going against Stoltmann's advice and taking all the money at once instead of spreading it out.

The analysis said the annuity method doesn't take into account the possibility of tax rates changing over time.

Another factor could be how hire your estate could be taxed if you die before all the lottery payments are made.

And the entity paying you could go bankrupt before you receive all of your winnings.

Although Stoltmann still says that taxes on the annuity checks might not be as much when compared to all the money at once.

And if even you do die before all payments are made, future payments become part of your estate like any other asset and the payments are still guaranteed.

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