Like a Boy Scout (or Batman), I want to always be prepared should I actually win Powerball. I pretty much have my plan in place; first, sign the ticket, then put it in a clear sleeve (I have one at home currently housing a Michael Jordan card), then go to the 4 biggest banks and open an account, then fly to the capital to collect my winnings (I presume they’ll wire it into my bank accounts).
But, here’s where I’m unsure of the proper details: what accounts, exactly, should I be opening? Let’s say I’m going to net $200 million, and so I want $50 million sent to each of four bank accounts.
Should they just be checking accounts? Or savings accounts? Or is there something uniquely suited for tens of millions of dollars?
Do I even need to open new bank accounts? Can I just send the whole $200 million to my current Chase checking account (where the balance is less than a grand)?
What is the practical reality for such a situation?
The first person you should hire would be a financial advisor who would answer this question for you in far more detail than you could ever imagine. But I think that, in a practical sense, and simple checking account would do, for at least a few months, while you figure things out.
Account insurance is absolutely non negotiable. The FDIC will cover you for up to $250k should your bank fail, leaving you on the hook for several hundred times that amount. I’m sure your personal banker would be more than happy to clear her schedule so she can talk to you about insuring a multi million dollar account.
My wife’s cousin is a banker, I’ll see what she has to say.
I’d sign the ticket, put it in a plastic sleeve and then in our home safe, then go to my existing bank and start a safe deposit box. Then I’d photocopy the ticket at home, and go put the original in the safe deposit box. Then I’d take the photocopy to a great financial advisor and follow their advice. Yeah, I never thought about that $250K limit on FDIC coverage. The advisor would tell me how to proceed there.
Not that anyone asked, but my capital city is about a two hour drive for me. If I won yuge money I’d just … drive up to Jeff City and sort things out. Not like I’ll have anything better to do tomorrow. No need to jump through a bunch of hoops. Yes, it would be a white knuckle drive knowing that I had a priceless scrap of paper in my wallet…
SIPC and FDIC insurance may not cover tens or hundreds of millions of dollars, but are U.S. banks really in that bad a shape that it would be safer to stuff your mattress full of cash? Probably not. So, in your admittedly hypothetical shoes, I would assume J. P. Morgan is not going out of business quite yet, and, like all similar firms, they offer “premium” accounts, including financial advice, should you choose to pay for it (and you might well want to unless you are going to spend time worrying about income and risk management and which funds to invest in and so forth). Also, I suppose there is nothing stopping you from depositing some of your money with UBS or whomever.
I am no expert capitalist, but I am not sure why you would need hundreds of millions of dollars in a single low-interest checking account. At the very least, open a savings account or something.
NO, not a financial planner, hire A LAWYER first. Specifically so they can legally represent you and also so they can do stuff like have a trust receive the money and set it up such that your identity is at a remove from it. Also, if you can receive the money anonymously in your state, they can do that for you. (personally I think I’d name my trust something so obscene that newspapers and news outlets would be unwilling to print/read the name, as an extra layer of obfuscation)
They’ll likely have ideas as to financial advisors and planners who you can hire in your area who have experience with that sort of wealth; they’re definitely not created equal.
Most states don’t require you to come forth right away; that’s the time you spend getting your ducks in a row and lining up the investment accounts, and so forth.
As far as FDIC is concerned, you’re way past that if you win the big lottery. You’re going to want to invest that.
First you secure the ticket. Then you hire experts. Which will probably include creating an offshore trust so you don’t lose 40% of your winnings to US taxes. Then they advise you on how / where to store and invest the money. Once all that’s in place, which might take a month, then you (your trust really) goes to the state lottery HQ to claim the winnings.
If for some reason you feel you have to go a bank then why not use a money market account or a certificate of deposit (CD)? They would offer far more interest.
There are special banks called private banks that cater to people who start their accounts with tens of millions, but they aren’t on every corner.
A financial institution, however, may provide a wider range of services. There are bunches of them. Here’s some of the two-namers: Merrill Lynch, Charles Schwab, Edward Jones, Goldman Sachs, Morgan Stanley. They can handle anything you want and also function as banks that you can write checks on. Yes, they charge for their services but you’ll still get better returns than an ordinary bank. I don’t know what private banks charge.
Whatever, I’ll echo everybody else in saying that get competent advisors first and act later.
Of course I do, generally. In California a Certified Financial Planner needs a degree and to have a lot of additional training and pass testing. It’s not easy. They are very highly trained professionals who take continuing education and are experts in investing and especially tax implications. Also things like Medicare and the health insurance for those under 65. They aren’t lawyers of course but they certainly know and are educated in the legal issues in their narrow field.
This is common knowledge for anyone who’s been financially successful which granted is probably not common for a lottery winner. You 100% want to go to a licensed CFP first.
Being a Certified Financial Planner is a national designation. Some states have lower titles, which still require a CPA and experience. AI input:
To become a Certified Financial Planner (CFP), you must complete four key requirements:
complete a CFP Board-registered education program, pass the CFP® exam, have a bachelor’s degree or higher, and gain relevant professional experience (6,000 hours of work or 4,000 hours of apprenticeship). Finally, you must agree to the CFP Board’s Code of Ethics.
Education
Obtain a bachelor’s degree or higher from an accredited college or university.
Thanks. I knew that all States had them but I didn’t feel like doing the research to find out how other States regulated.
I’ll add that CFPs do not sell products or work on commission. They work with you to determine the appropriate level of risk and your financial goals to invest appropriately. They are either paid hourly or take a percentage of the funds that they manage. They will have a tax professional on staff or work with your designated tax person to assure that they are on the same page.
My sister is a lawyer. A couple of years ago, she posted a meme she’d seen on Instagram or somewhere. I’ll paraphrase:
“Everyone keeps saying that the first thing you should do if you win the 1.3 billion in the Powerball is hire a lawyer. I’m a lawyer. I will be your Lottery Lawyer. I have no idea what to do but we’re gonna have fun!”
Of course my sister a) doesn’t work in that kind of law; b) can’t and won’t represent family; and c) practices in another state than where I live.
Regardless, she and I will still have some fun. I’m sure she’ll gladly bring her husband and my nephew along when I take them to Disneyworld.
I had a friend whose safe deposit box was broken into during this robbery:
1986 Hollywood heist
In June 1986, a highly trained group, called the “Hole in the Ground” crew by the media, tunneled under the First Interstate Bank in Hollywood at Spaulding Avenue and Sunset Boulevard through an extensive network of tunnels over the course of several months and took about US$270,000 (equivalent to $770,000 in 2024) in cash and the contents of 36 safe deposit boxes valued at US$2,500,000 (equivalent to $7,200,000 in 2024). The group rode all-terrain vehiclesthrough the underground storm drain system of Los Angeles, and used gas-powered generators, hammer drills, power saws, and digging equipment to tunnel 100 ft (30 m) up into the bank’s vault.[14][15]
He lost his coin collection, which he valued at $50K. The bank said they would give him $5K in compensation, or he could take his chances at a trial, and they would fight him with every resource they had. He took the $5K.
Hypothetical then: One hundred million dollar Powerball ticket (not exactly that rare nowadays) in an established bank’s safety deposit box. How much (rough guess, of course) on how much it would cost to insure that ticket?