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Wednesday, March 10, 2010

11, 34, 44, 31, 52, 32

Here is a tough decision for you. Take $82.9 million dollars right away (less federal withholdoings), or get $134 million in equal payments of $6.7 million. Actually the decision is not that tough, take the cash, pay the IRS their $23.2 million and pocket almost $60,000,000 clear.

That is the decision John Dalkos has to make within the next sixty days after he walked into the California Lottery offices in Santa Ana on Monday with the winning ticket and the numbers shown in the title. Dalkos purchased his winning ticket at a neighborhood donut shop, whose winner will see a nice check in excess of $600,000.

Once Dalkos makes the decision we all would welcome the opportunity to make, he has some more decisions to make. While many say, "I'd just try to lead my normal life," a "normal" guy putting $60 million in the bank, and being plastered all over the media, precludes much of normalcy. Can you be "normal?" Would you want to be? As with all ethical and moral dilemmas and discussions, answer the question, "what would you do?"

Let's play a game of "what if?" What if you were the winner of mega-millions that guarantee that not only you do not need to punch a clock on a 9-5 job anymore, but if you so choose neither will your kids. What would you do?
This is a game I have played before, actually Leslie and I have played it on car trips or walks with the dog. "What if we won a big lottery jackpot and instantly had no financial concerns other than how to protect, invest, grow and allocate wealth?"

I have always said the first thing I would do is hire someone I have known and trusted for many years as an executive assistant. Toss over the Blackberry and say, "if they are not in here I don't know them and we don't talk to them and they don't talk to us." Can you imagine the creeps that come out looking to get their hands on any of Dalkos' $60 million clear? You think you get solicitations now, have the newspaper put your name and picture on the front page next to a check with nine digits on it. So step one, try to isolate from the greed headed my way.

Now we have to have some plans and think long term. Who gets what? You have family after all, what is "fair" in your mind versus their mind? How about setting up education trusts for all the neices and nephews guaranteeing their education through doctorates--as long as they not only stay enrolled but have meet minimum class requirements and grades over 3.0 (maybe 2.5 we'll see). After all we don't want to encourage career students. Get your education and go make something of it.

Do we give lump sums to our brothers and sisters? How much? How about carving out a portion and setting up an annuity that distributes a certain amount annually for twenty years? No big lump sum but a bit of help every year? That seems appropriate.

So we've taken care of the family with part of our $60 million, let's say that takes a total of $7 of it. We still have $53 million left. Okay, time to make some big divisions. For starters let's put $25 million into a foundation, $25 million into the lock-down account for growth and income, and $3 million for let's see what we may need account.

With your picture in the paper and the big check comes not only the hucksters trying to shake some of the cash out of you and onto them, but every charity and non-profit that can get in touch with you will do so. Many, most, have very compelling stories and missions, but we need a standard and criteria for donations--hence a foundation. Set up a foundation that will clearly set forth what types of charities will be given funds, all requests will be reviewed and decisions made based upon those guidelines. So we have family and community taken care of, what's next?

Oh, us! What do we do for ourselves? We have a little under $30 million left, what makes sense? Of course our lives will change, no more sweating how big the Amex bill will be or if we calculated right on our quarterly's, but how will we allow our lives to change? How about a budget? Take most of the money that is left and invest in some annuities and funds that will spin off income for either re-investment or living expenses. Protect the assets!

Will we still live in our current house? We like to think that yes we would. We love our neighborhood and neighbors. We like the house, but it needs a new kitchen, foundation work, new roof and I'd like to convert to solar. So we most likely would do a remodel and rehab on the place and move back in. As for cars, I like my Pilot, though Leslie wants a VW Bug convertible, I'm sure we can fit that in.

Vacations to exotic places? Most likely, but we need to be careful, the kids are in school and we don't want to disrupt their schedules so we would be looking at summer travel around their going to camp, or maybe a trip over Christmas break. Chances are I could finally justify $300+ green fees for Pebble Beach and firing off a score close to my lottery winnings.

Now the big question: work? Everyone asks about lottery winners, "would you still work?" I like to say, yes I would still work. What I don't know if exactly how that work would look. Because of my profession, mortgage broker, I can combine lottery winnings and work and help our company with more ability to fund mortgages while getting a return on investment. Plus I love what I do, helping families buy homes. Finally, if I weren't working and getting out of the house quite often during the week Leslie might go nuts. Leslie is the same way, she cannot sit still, even watching television at night she is writing, knitting, doing some project. Plus, we need to work to show our children what is expected and make sure they know that despite our good fortune, not working is not an option--for us or them.

Or we could go buy a bunch of land in the middle of Colorado build a big house and do nothing all day and hoard our money. Maybe a vacation home...

So I have a plan for when we win the big lottery. Of course it would help our chances if we bought lottery tickets.

What would you do? What if next week your numbers are pulled and $134 million fell into your lap?

Addendum: According to the California lottery website $0.95 (ninety-five cents) of every dollar spent on lottery tickets are "returned to the community" in prizes, commissions to stores that sell winning numbers and education. Thirty-four cents of every dollar goes into education and fifty-cents goes to winning payouts. Since 1985 the lottery has contributed over $22 billion to California schools.

Go buy your ticket, and have a plan for when you win!


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