Millions of Ontarians buy lottery tickets each week, but few ever consider the ramifications of actually winning. Here’s what you should do if your numbers are called.
It’s the glittering dream chased by millions week after week: finally winning the lottery. Just imagine the freedom, to pinch the tagline, that a cool, tax-free $1 million or $10 million or—gasp—$50 million would actually bring. Forget the prosaic stuff like paying off credit-card debt or upgrading your rust bucket—though that would almost certainly happen in short order, followed by some combination of exotic travel, lavish gift-giving, and hedonistic shopping sprees.
In all seriousness, if your lottery numbers actually came up, what is the first thing you should do, especially if you win a monstrous sum like one of those multi-million Lotto Max purses? Quit your job? Hire a lawyer? Claim the prize immediately or stay low for a month or two until it’s finally sunk in?
Given the frequency of wins in Ontario—a total of 16 $1 million prizes were given out across all games in November, for example—these are questions worth asking now while your cooler head prevails.
We sought enlightenment from various professionals; maybe you’ll be lucky enough to need this advice one day. And if you’re already heading down to the Toronto Prize Centre at 20 Dundas St. W. with a signed and winning ticket in hand, here’s the précised version of our story: Don’t make any hasty purchases. And maybe go see a counselor.
What the shrink says:
“Do nothing, absolutely nothing—at least not at first,” offers Toronto psychotherapist Kali Hewitt-Blackie, who has never won a lottery but says she is well-equipped to handle it should the Lottery Fairy be reading this.
“It’s the equivalent of a total shock, almost like post-traumatic stress disorder. I am being somewhat facetious but, anytime there is a massive change, you require a digestion period.
“It’s also tied to self-identity,” she adds. “If you buy all the things you can now buy, you’re setting yourself apart from other people and having a ‘not me’ experience. It could almost be like survivor guilt, like when people survive a plane crash. It would be winner’s guilt, which probably drives people to give away piles of money because they feel they didn’t do anything for it.”
While Hewitt-Blackie is reluctant to suggest precisely how long a person should wait before claiming a prize or going hog-wild—and you have exactly one year from the date of the draw before unclaimed winnings are handed over to the provincial government—she adds that “anytime something is done impulsively, it’s usually not a thoughtful plan.”
What the accountant says:
Perhaps not surprisingly, the most sobering advice comes from the fellow who deals with Canada Revenue Agency for a living.
“Seek counsel from the most trusted advisor you can think of who would also be the most objective person under the circumstances,” offers Ken Sloan, CA with Mississauga’s Jarvis Ryan Associates. Sloan also notes that, while lottery winnings in Canada are not considered taxable income (unlike in the U.S.), any gains on that money in the form of interest are.
“The government isn’t dumb,” Sloan intones, “and I’m sure they are fully aware of who lottery winners are and if, in a few shorts years, they don’t see significant upturn in someone’s income—most likely from investments—they’d want to investigate further and find out why not.
“A windfall coming in the middle of an otherwise ordinary life is a big deal, and to suddenly change one’s life completely probably shows poor judgment,” Sloan adds, noting—as several of our experts did—that a win of $1 million in today’s economy, though impactful, would not be insanely life-altering. In that scenario, folks are ill-advised to quit their jobs even after they paid off debts.
“But then,” adds Sloan, “ask me after I’ve won my own lottery. You have to assess your situation individually. You’d be foolish to make rash lifestyle changes very quickly.”
What the OLG says:
“It is a smart thing to find someone to help you deal with the winnings before you come in,” says Sarah Kiriliuk, media-relations manager with the Ontario Lottery and Gaming Corporation, the government body responsible for 24 gaming sites and sales of lottery products across the province, and which hands out approximately $1.7 billion in prizes every year.
However, Kiriliuk—who has encountered thousands of stunned winners in her three years at OLG —adds that “you don’t need to have legal or financial advice to claim your prize. You can, but that can always happen afterwards. We also suggest coming in sooner rather than later because, obviously, the sooner you deposit that cheque, the quicker you’ll start earning money on it.” (And paying taxes on those earnings.)
Kiriliuk continues: “We don’t provide financial or legal advice or make recommendations. But that’s not a negative thing; it’s about the fact that winnings are absolutely your money to do with what you want.”
The OLG will help organize an escort to deliver you and your winnings to your bank en route from the Prize Centre. “Some people feel scared walking around with a cheque for $50 million in their pocket,” Kiriliuk laughs, before adding that a $16 million ticket sold last June in Hamilton remains unclaimed and “we really want to give that money to the right person.”
What the investor says:
For Wolfgang Klein, portfolio manager with Canaccord Wealth Management, the lottery-win question isn’t theoretical. “I actually had a client who won a couple of mill in Lotto 649,” howls the frequent TV commentator.
“I’d advise two things. First, don’t feel guilty. You bought the ticket, it won, don’t feel that you have to give it away. And two, learn about money and how it can grow and produce fruit.
“Be sure to hire a professional to work with you. There are a lot of different choices you can make with your money and, as your money starts to make money for you, your tax situation is going to change.
“One other thing,” Klein adds. “Don’t feel like you have to give it to your kids or grandkids. They’ll start to feel like they don’t have to work as much and that can make it a bit of a burden.” Sorry, Junior.
What the legal eagle says:
“Three things first and foremost,” offers Toronto lawyer Walter Stasyshyn, speaking specifically to multimillion-dollar sums. “One, take your money, pay off all your debts, and then park it in a GIC or a bond or something that’s locked up for six months to a year.
“Next, get psychological and career counseling and really think this through. What’s the psychology behind having that kind of money, and how do you deal with all the new friends who will inevitably line up at the trough? Career counseling can help you understand what to do with the rest of your life. Is it travel, setting up your own business, investing? How will your life unfold and how can you best fulfill your aspirations?
“Finally,” adds Stasyshyn, “seek out a really reputable wealth-management consultant. Any fool can spend money, especially on depreciating assets. What you need to do is find a path to grow and maintain your wealth. Because if you play it right and invest that money—and figure out how to cope with all the external pressures—you could have a fantastic lifestyle for the rest of your life.”
Have you ever won a lottery? What did you do afterward? Let us know in the comments section below.