The $183 million lottery ticket that was sold in Maryland last week may bring its owner something more than riches - a black cloud that comes with managing loads of new money while balancing family, friends and sanity.
Joining the elite club of lotto winners means kissing your old life goodbye, and experts say that may also include handling new anxiety, feelings of guilt and more money than one person can spend in a lifetime.
Granted, many people would gladly take on those problems for the chance to erase their debt, buy new homes and cars, maybe even own a baseball team. But life after a financial windfall is not always a bed of roses.
"The research shows that winning the lottery doesn't buy you happiness," said Jinhee Kim, an assistant professor in the family studies department at the University of Maryland.
The latest winner of the Mega Millions jackpot may well be pondering all of that. The ticket holder has not come forward.
About 70 percent of people who receive sudden income don't save the money, and some file for bankruptcy protection within a few years, Kim said. Many people lack expertise in handling such a large amount of money, Kim said.
As they struggle with their new millions, many also grapple with their new status.
A large windfall could trigger psychological problems, such as anxiety or depression, Kim said. It may also create feelings of guilt that the recipient is rich while friends and family members aren't. Some may suffer feelings of paranoia that people will steal money from them, or that their friends are only interested in their money.
"A lot of money can ruin people's lives," said Mark Dyer, a senior vice president of Ferris, Baker Watts Inc. in Hunt Valley who has advised lotto winners.
Friday's winning lotto numbers - 1, 2, 3, 12, 37 and Mega Ball 35 - made for the largest jackpot won in Maryland. The $183 million is being offered in 26 installments over 25 years or in a lump sum of $114.9 million.
After Uncle Sam and the state take about 42.5 percent of the winnings, the lump-sum payment would be whittled down to about $66 million. If the winner chooses installment payments of about $4 million each, the after-tax winnings will total about $106 million. (Either way, the federal cut is about 35 percent, while the state will take 7.5 percent.)
So what's a winner to do?
Dyer suggests a two- to three-week vacation to think about how to spend the money. Write down all the things you want to buy. Pay off all those credit card bills. Think about where you want to live. When you buy that new mansion or the his and hers Porsches, be sure to pay cash.
"The first thing that people need to do is take a breath, go slow, start making lists of things that are important to them and their family," Dyer said. "And it's important to get some professional advice," which typically costs about 1 percent of the money being managed.
Experts say their advice to the lottery winner would be to take the lump sum, rather than the installments.
"The lump sum is so large, it really makes no sense to consider taking the annual payment," Dyer said.
Most lotto winners choose to cash out this way, said Buddy Roogow, director of the Maryland State Lottery. It gives them more options for how to spend and invest their money and what kinds of charitable contributions to make.
Joseph Cirelli, a financial consultant for Smith Barney, said he would advise putting a chunk of the money into a low-risk, tax-free investment.
"That's the first thing I would do for a client, is make sure they had a high-quality municipal bond ladder that would guarantee them a healthy income," Cirelli said.
Investing $20 million in bonds earning 4 percent, for instance, would guarantee the lotto winner $800,000 a year of tax-free income.
Dyer agrees that once you have made initial purchases - the cars, the house, the boat - it's time to think about how to invest the balance so you can live off the cash it generates without dipping into the balance.
He too would invest in safe, tax-free investments such as municipal bonds. Some money should also go into equity and growth stocks, he said, so the winner can generate even more cash when the market comes back.
"As you look at your asset allocation, how much money goes into each of those categories depends on how much income the family wants to generate," Dyer said.
Estate taxes also must be taken into account. If the winner is elderly and dies, for instance, taxes on the estate can sharply cut into the winnings.
When it comes to gifts, the government allows $11,000 per recipient to be given away tax-free each year, and spouses can give unlimited amounts to one another. So a man who wins the lotto can give $30 million to his wife, and each of them can give $11,000 to their child each year for the rest of their lives.
