What to do if you win the lottery

Congratulations, you won big money! Here’s what to do when claiming your cash prize.

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If you’ve experienced a sudden financial windfall, you’re probably bursting with excitement! But, you likely also have a million questions swirling around in your head about what to do next. That’s okay – we’ll walk through what you need to know to get your money, stay safe from pushy outsiders and settle in financially.

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Can I remain anonymous?

While winning the lottery might sounds like something you’d want to shout from the rooftops, many winners understandably want to keep the news to themselves. Coming into money can be overwhelming, especially when “old friends” and pushy strangers suddenly start coming out of the woodwork to grab a slice of the pie for themselves.

Graphic showing someone suspending a rock above a wealthy man's headThe dangers of winning the lottery

Tragically, the threat to lottery winners’ privacy can go beyond merely fending off the greedy public. In 2006, a Florida woman befriended a man who won a $30 million jackpot only to murder him and take his assets – she was convicted of first-degree murder and sentenced to life in prison. And in 2016, an American woman who won less than $500,000 was murdered by a gunman at her door after he demanded that she give him money.

The threat is no less real in Canada, where police managed to catch a man before he invaded the home of a couple in Quebec who had won a $27 million jackpot. The man had boasted to friends of his plan to extort money from the couple and was trying to purchase a gun – investigators alleged that he intended to commit murder. Fortunately, the couple and their 3-year-old daughter were out of town at the time, and the plan was foiled.

Winners may also have to be on the lookout for people nursing a grudge against them or who want to see them hurt.

Doctors and other medical people often try to remain anonymous to avoid a sudden onslaught of malpractice lawsuits from former, unsatisfied patients. Furthermore, police members, private investigators and people with abusive spouses have sometimes been known to get a pass on lotto publicity requirements to protect them and their families from being targeted by harmful individuals.

If you win the lottery, don’t take you or your family’s safety for granted. Act cautiously, and speak to your local police if you believe there is any threat to your safety or the safety of anyone you know.

Unfortunately, maintaining your privacy isn’t quite as simple as asking the lottery to mail you a cheque. Lottery organizations often require that winners take part in publicity photos to claim their prize – this is because those photos prove to the public that the lottery has real winners and isn’t a scam.

According to rules set by the Interprovincial Lottery Corporation (which jointly owns all 5 provincial lottery organizations), winners are not entitled to receive prizes unless, upon request, they consent to the publication of their name, address, place of residence and a recent photograph reflecting their true appearance.

So, basically, the lottery can mandate that you make your identity public. In a CBC News report, British Columbia Lottery Corporation spokesperson Chris Fairclough stated, “The minute a player hands over his 3 or 5 dollars and purchases a lottery ticket, he is agreeing to those conditions.”

But provinces and territories have differing standards for enforcing publicity rules, which may afford you some privacy in the event of winning the lottery. However, even if you can keep your identity from being publicized, you will still have to provide the lottery with multiple pieces of personal ID, including photo ID, for verification purposes before collecting your winnings.

Provincial and territorial lottery privacy policies

Below is a quick summary of the privacy laws in each province and territory with regards to large prizes. (Many lotto organizations allow small prizes – often under $1,000 – to be claimed at lottery retailers subject to the availability of funds. If retailers don’t have enough funds on hand, they may refer you to another retailer or cut you a cheque instead.)

Speak with a representative of the lottery organization in your province or territory to find out exactly what rules apply to you.

PlaceCan you remain private?
British Columbia
  • Yes, if there is a real concern for the winner’s safety. Evidence of this concern must be verifiable and capable of independent confirmation.
Alberta
  • Requires winners to show up in person to claim their prize, but does not state that their identities must be publicized.
Saskatchewan
  • Requires winners to show up in person to claim their prize, but does not state that their identities must be publicized. Prizes of $10,000+ require an in-person appointment.
Manitoba
  • Requires winners to show up in person to claim their prize, but does not state that their identities must be publicized.
Ontario
  • Winners’ identities are generally published in accordance with the Ontario Lottery and Gaming Corporation’s (OLG’s) policies and prize claim form. However, OLG staff may make exceptions on rare occasions based on individual circumstances.
Quebec
  • Requires winners to show up in person to claim their prize, but does not state that their identities must be publicized.
New Brunswick
  • To claim prizes of $10,000+, you must allow the Atlantic Lottery Corporation (ALC) to publicize your identity. Only general information like your name, occupation, hometown and the amount of your win will be released along with your photo.
Newfoundland & Labrador
  • To claim prizes of $10,000+, you must allow the Atlantic Lottery Corporation (ALC) to publicize your identity. Only general information like your name, occupation, hometown and the amount of your win will be released along with your photo.
Prince Edward Island
  • To claim prizes of $10,000+, you must allow the Atlantic Lottery Corporation (ALC) to publicize your identity. Only general information like your name, occupation, hometown and the amount of your win will be released along with your photo.
Nova Scotia
  • To claim prizes of $10,000+, you must allow the Atlantic Lottery Corporation (ALC) to publicize your identity. Only general information like your name, occupation, hometown and the amount of your win will be released along with your photo.
Yukon
  • Requires winners to show up in person to claim their prize, but does not state that their identities must be publicized.
Northwest Territories
  • Requires winners to show up in person to claim their prize, but does not state that their identities must be publicized.
Nunuvut
  • Requires winners to show up in person to claim their prize, but does not state that their identities must be publicized.

Masked winners

Woman holding a white mask in front of her face

You might have seen photos of past lotto winners wearing masks or even full-body costumes while receiving their cheques. Far from eccentric, these winners are trying to accept their winnings while avoiding unwanted public attention. While wearing a mask for publicity photos may not stop general information about winners’ (like their names) from being published, it may help reduce the spotlight that exists on them outside of those who know them personally.

However, as per the Interprovincial Lottery Corporation’s rules, the lottery can still, at its own discretion, require winners to allow the publication of their true photos, names and other basic personal information before collecting their prizes. Wearing a full batman costume or a crazy wig and dark glasses may not, therefore, always be an option.

Assembling a team of professionals

You’ll first want to speak to a trusts and estates attorney that specializes in helping people who have experienced large financial windfalls. Search through the Canadian Bar Association website, your provincial bar association website or sites like Lawyers.com to find reputable attorneys that specialize in cases like yours.

Take your time vetting your attorney. Later on, you’ll want them to sit in with you when you hire a financial adviser and an accountant. Your attorney will also help you create a trust — an entity that lets you claim your windfall without revealing your name.

Claiming your prize

Because policies for claiming lotto prizes differ depending on where you live, the first step after winning is to contact the lottery organization in your province or territory to find out what its exact requirements are for making a claim.

Graphic of a hand holding a warning signImportant!

Whoever signs the back of the lottery ticket gets the money. Be sure to sign your ticket and keep it safe, because it won’t officially belong to you until you’ve given it your autograph.

You typically have 1 year to claim your winnings. Lottery tickets often have expiry dates printed on them – if it’s past this date, you will not be able to make a claim.

It’s not as prevalent in Canada as it is in the US to have the option of choosing between receiving winnings as a lump sum (all at once) or as an annuity (smaller payments split over many years). However, some lotteries may advertise “cash for life” or something similar, which typically means winnings are disbursed as an annuity.

People who win above a certain threshold (often between $1,000 and $10,000) must physically go to a nearby lottery office to verify their identities, receive their money and possibly take publicity pictures to assure the public that someone legitimately won the prize.

(See above to learn more about winning the lottery and maintaining your privacy.)

You will likely be required to present 2 pieces of ID, at least one of which has to have your photo on it (like a passport or driver’s license). Be sure to contact the lottery organization before you visit to make sure you understand what types of ID are allowed.

Do I have to pay taxes on my lottery winnings?

Close-up picture of Canadian tax forms

In Canada, lottery winnings are tax free! However, this is not the case in the States, so if you visit the US and buy a lottery ticket there, you’ll have to pay the IRS a withholding tax of around 30% if you win. Unfortunately, you won’t be able to claim tax credits in Canada for this payment.

If you can prove you have experienced gambling losses, you may be able to file a tax return in the US (a 1040NR) to get back some of the American taxes you paid.

What to do in the short term

After you’ve collected your windfall and paid taxes on it, you can lay the foundation for a solid financial future. Here are a few wise things to do.

Get your money into your accounts

If you won more than $100,000, consider spreading your money out across multiple banks because the Canada Deposit Insurance Corporation (CDIC) only insures up to $100,000 per account owner per bank. The amount of coverage may differ for credit unions.

If you need to get your money back into a bank account internationally or send money to family overseas, compare international money transfer services that are best equipped to help you with a large transfer.

Work with your financial adviser to get your funds into your trust or bank account before you start spending it.

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Pay off debts

The longer you hold onto debt, the more interest you’ll accrue over the long run. Now is the perfect time to pay off everything you owe: credit cards, student loans, mortgages and more. It’s a responsible first step that will save you money over time.

Put money into a rainy-day fund

You might be surprised by how many lottery winners end up broke. Whether through poor spending habits or plain bad luck, it’s easy to squander a large windfall. So plan accordingly and create a backup fund.

A rainy-day fund is typically stocked with 6 months’ worth of your salary. Since you’ve just received a large sum of money, you may instead want to put a percentage of the windfall into an emergency fund. To find the right amount to save, speak with a financial adviser.

Consider waiting for a while before doing anything else

Once you’ve accepted the money, paid off your debts, created an emergency fund and handled any immediate expenses, consider doing absolutely nothing. Your winnings aren’t going anywhere.

Many financial advisers recommend letting the excitement die down before taking any other actions.

You might want to live as you normally would for the at least a few months or even a year. This will give you time to carefully plan out your next steps.

For example, work with your financial adviser to determine how much of your windfall you’ll give to family and friends. You may even consider meeting with a personal counselor to help you deal with the emotions and confusion that can come with receiving a large sum of money.

What to do in the long term

Now that you’ve taken care of your short-term needs, your goal is to protect your windfall for the long term.

Create an investment strategy

Work with your financial adviser to assemble an investment strategy. This strategy should be consistent with your tolerance for risk.

To get your feet wet, you might first look at investments like short-term corporate bonds, government securities and short-term municipal bonds. These are considered relatively safe investments. Depending on the size of your windfall, you may generate more than you would expect off of these low-risk investments alone.

After consulting with your financial adviser, you could expand your investment portfolio to include investments in stocks or real estate. Your financial adviser can help you create a portfolio with the right mix of stocks, bonds and other securities.

Investing

Start planning your estate

With the right planning and help from wise and qualified professionals, it’s possible to live the rest of your life without any financial worries.

You may want your children and relatives to enjoy the same comfort, so begin the process of estate planning. In short, this means you’ll decide what happens to your assets when you pass away.

Work with a financial adviser, tax professional and a highly experienced estate planning lawyer to settle matters of your estate — preferably sooner rather than later.

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