As it turns out, Florida has an “Intangibles Tax”, as discussed at Florida Dept. of Revenue - Florida Dept. of Revenue
So, if I’m reading this correctly, (the tax rate is $1 per $1000 of assets), there could be several thousand dollars of Florida Intangibles tax due each year when taking a large lump sum payment and investing it in some fashion.
There ain’t no such thing as a free lunch 
Anyone that doesn’t take the lump sum either has absolutely no self control or knows absolutely nothing about finance, taxes, and the power of compounding interest.
Don’t be foolish people. It is always (well not always, but 99.99% of the time) better to take money now than later.
Lump sum, but not because I don’t trust the government to make payments, or because I’m convinced of my superior investment ability. But rather because most of it would be going to other people, a several of whom are old enough that payments over 20+ years are not likely to do them much good. And because, while I would not be at all inclined to blow the whole wad (the 2 or so M$ left to me), there would be some up front purchases that I would prefer to make outright, rather than borrowing on the basis of an annuity.
1.5 M$ to each of my two brothers.
1 M$ to each of my parents.
~ 5 M$ distributed among several friends.
2 M$ left to me.
With that, I would spend roughly 1-200 K$ on housing and the Mini-Cooper I’ve wanted for some time, and retire from working so quickly I’d leave skid marks. Hire a financial advisor to invest the balance and set me up with health insurance, and make sure I have enough income to live quietly and comfortably (with no mortgage or car payment or need to save for the future, $50 K/year would be plenty). Bliss!
I’d set up a trust and claim the ticket under the trust. By keeping my name out of the media, I might be able to avoid the solicitations from strangers for money. (I understand that lottery winners often need to change their phone numbers to avoid constant calls.)
Next, I’d take the lump sum. I believe that if you take the annuity and die prior to the end of it, taxes are immediately due on the net present value. This can be a big problem for your heirs if you haven’t planned your estate properly.
As others have suggested, you can take the lump sum, invest it and live quite well off of the proceeds. However, it’s not so simple to say “get a great financial adviser” because lots of them are incompetent or really good at making money for themselves but not for you. I’d probably invest the money in low-cost mutual funds, some of which are designed to produce current income and others that will create long-term capital gains.
I’d definitely take the lump sum
Over the past year or so, i’ve seen a few winners of the big lotteries on TV. In each case, they took the lump sum, and the news reports noted how much cash they actually took home.
I worked out the final sum as a percentage of the announced, annuitized prize money, and in all cases the final lump sum, after taxes, came to about 40% of the original annuitized amount.
So, for a prize of $40 million, you’d probably take home around $15-16 million after tax. Of course, this amount would depend on whether you had to pay state income tax.
And as Cunctator said, in Australia the prize in only offered as a lump sum, and is always free of tax. You only pay tax on the interest earned after you invest the money.
Ivylad and I sign the back of the ticket.
We call our accountant and get the financial advice to AVOID (not evade) as many taxes as possible.
We claim the prize as an annuity, getting it paid into a blind trust so no one knows who we are.
We tell no one. Not even family. We given them annual $11,000 anonymous payments. (They don’t get taxed on that amount.)
I work until Ivygirl is out of high school, maxing out my 401k.
Then I retire and we travel.
Oh, yes, pay off the bills and get me a new car. Beyond that I cannot imagine.
I believe most articles about this subject agree that the lump sum, and a good accountant, is the wiser approach.
FWIW, you will run into this same problem if you come to Las Vegas and win MegaBucks or Wheel Of Fortune, or any of the other big progressive jackpots over a million. Look at the fine print on those machines and you will note that the prizes are paid over 20-27 years, with the option for a lump sum payout.
Should you win one of those jackpots while you are in Las Vegas, call your old buddy DMark and I will be happy to help you load those sacks of money in your, and my, car trunk.
I’ve never played the lottery. What does “sign[ing] the back of the ticket” do?
You know, i’ve always thought that this was false advertising on the part of the lotteries and the casinos, when they say that the prize is, for example, $40 million.
Because $40 million paid out in equal yearly payments over the next 25 years is not the same as $40 million right now.
You try borrowing $250,000 from the bank and telling them that you’ll pay it back in 25 annual installments of $10,000.
Take the lump sum, which, in my state, would end up around $13 million after taxes.
Let’s see -
$1.3 million to my church. They can pay off the mortgage.
Pay off the house in full (I like the idea of owning a house, free and clear). Trust funds for each of my kids. Nothing outrageous, maybe a hundred thousand apiece - enough to get them thru college and a down payment on their first house. I’ve got fifteen nieces and nephews (and grand-nieces) - ten grand apiece. That’s about another five hundred thousand, so I am at $11.2 million.
The 200K goes to a hell of a weekend for everyone in my family. Catered sit-down dinner, a nice gift for everyone (brooches for the ladies, a nice watch for each of the gentlemen), a trip to the mall with a gift certificate for everyone, champagne brunch on Sunday.
The remaining $11 million goes into various investments. One million into something as safe as can be managed. The other ten into moderate-risk, moderate return investments, highly diversified. If I realize 5% after taxes, I will be completely satisfied. I only spend about $250,000 a year, so my nest egg continues to grow. I wouldn’t quit my job, but I think my attitude might take a slight turn for the worse. 
Then we start looking into trips, jewelry for the Lovely and Talented Mrs. Shodan, and the like.
This would all be nice, except that I don’t buy lottery tickets. I must have received it as a gift.
Regards,
Shodan
As with the other non-US dopers, I’d have no choice but to take it as a lump sum, and I would pay $0 in tax.
It doesn’t seem complicated to me. I’d give 25% to my parents and 25% to Mrs. RickJay’s Dad and tell them to take care of the families. I take my share and put it in the bank. Then we pay off all debts (about $75,000.) Then we spend some time finding a house, buy it, and furnish it - assume that will cost $750,000, leaving me with $19,175,000. I take $18 million, call my investments guy, and invest the money in low-risk stuff - bonds, index funds, and the like. We blow $1.25 million on a year of travel, gambling, and nuttiness, and then live like royalty for the rest of our lives.
It claims the winning ticket as yours. There’s a space on the back, at least in FL, for you to sign it.
Almost by definition, neither of those cases is a “great” financial advisor. One is in fact a lousy financial advisor, the other one’s a rat.
And BTW I’ll gladly take a yearly 0.1% (Florida) Intangibles Tax on a $10M lump over a yearly 33% (Federal) Income Tax on a $1m-a-year payment.
Yeah, my one or two bucks a month are really breaking me.
Reminds me of an old joke that I will probably screw up, but here goes:
Scottish man wins $10,000,000 in the lottery but seems depressed.
Someone asks, “why are you depressed? You just won $10,000,000!”
“Yes,” the Scottish guy answers, “but I bought two $1.00 tickets, so the other dollar was a waste of money.”
I’d take the lump sum–it certainly allows for more investment options. If you’re worried about blowing it all you could put some of it into an annuity, which generally is not a great investment but would at least guarantee you a minimum income no matter what happens to the rest. One thing to think about is that if you take long-term payments and die, your heirs can get stuck with the remaining taxes, and the IRS usually treats it as if they had inherited a lump sum. In other words, if 15 annual payments of $500,000 each are coming, the IRS calculates the tax as if the heirs got $7.5 million now. For most people that would be bad news.
With a lump sum, you pay the taxes once, not every year.
Well, first off, it wouldn’t be ME who had won the lottery, it would be my husband. I don’t gamble, it’s not fun for me. Even when I lived in Las Vegas, I rarely gambled, I hardly even played the slots which were EVERYWHERE, in convenience stores, in laundromats, supermarkets, drugstores, EVERYWHERE. But my husband buys a lottery ticket four days of the week. Always the same four days, too.
He’d ask me for advice. First, we’d take the lump sum. See a lawyer, draw up new wills. Pay off the mortgage on the farm and the book store. We own our home free and clear. He’d want to buy a new house, but I don’t want to. This is my grandparents’ house, and I’m emotionally attached to it. Pay off the current vehicle loans. We might buy another vehicle. Pay off our daughter’s student loans, and see if she wants to get her master’s degree, and possibly even a doctorate. Pay off any other high-interest loans we might have outstanding.
Once we’ve paid off what we owe, it’s time to draw up a budget. We’ve already got a CPA/financial adviser, who would be delighted to help. My goal would be to live off the interest only. I’d continue running the book store, and I’d urge my husband to keep working at his job. He gets too bored if he doesn’t have a job to go to. I think he’d get a little more consideration from his boss, too, if his boss knew that Bill COULD tell him to take the job and shove it.
His parents are dead. My parents are still living, so we’d probably give them a cut. Our siblings would get something too, though in the case of his brother and sister, we’d have to set up trusts, as they have no financial sense at all. Set up a trust for our daughter, too, with a bit of spending money allowance, but she’d have to keep working or go back to school. She’s only 25, and needs to be working at something.
My husband and daughter would probably take a nice vacation somewhere. I hate to travel, so I probably wouldn’t go anywhere, except to science fiction conventions.
My husband has a farm out in West Texas which he mainly uses as a hunting range. The building on it could use some MAJOR improvements, like real indoor plumbing. He’d also want to spend some serious money on guns. This would have to be done on the interest money.
I’ve got a lot of elective medical stuff that I could have done, which would vastly improve my quality of life. We’d probably do that, as the interest allows us the money to do so.
All in all, we’d try to continue to live as we do now…just upgraded, and without paying out interest. The loan officer at the credit union says that we have much less debt than most people, and we’re happy with that, but I’d prefer to be completely debt-free.
You know who would really win? That pesky, no good neighbor that you hate. Or the co-worker who sleeps and does nothing all day.
Most states and multi-state compacts like Powerball sell their annuity jackpots to insurance companies for the “lump sum” amount.
The insurance company then takes its chances that interest rates and/or the stock market will provide big enough returns over 30 years that they can pay out the annuity and still make a profit.
The trouble for the lotto winner is that ,in effect, all of his money is invested with one insurance company --not in a vastly diversified portfolio that can withstand the failure of one or two companies with which it is invested.
I’d rather buy a few gold coins, several mutual funds from different mutual fund companies, lots of CDs from lots of different banks and credit unions, government bonds–both munis and federal, and be responsible for my own future.
I would take the lump sum. I don’t need the state going bankrupt and saying, oh so sorry. I have many plans but most of all take care of people. I think I could and would be responsible not to spend everything. Good luck to me as the drawing is almost ready to take off. Keep ur fingers crossed.