Winners with a physical ticket can take it to a shop they bought it from and fill out a form, or go to the Lotto head office in Auckland. Photo: Supplied / Lotto NZ
Lotto has jackpotted to $45 million for Wednesday's draw - but what would you do if you won it? While you might have a wishlist of houses, cars, travel and shopping, one financial adviser who has previously advised winners says there are a few things you should know.
Tim Fairbrother, of Rival Wealth, said people who won were often in a state of disbelief initially.
If you win when you're playing online, you will be sent a prize claim form.
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Winners with a physical ticket can take it to a shop they bought it from and fill out a form, or go to the Lotto head office in Auckland.
In most cases, Lotto staff try to meet in person with winners to talk to them about what will happen (there is champagne offered).
Winners are given a booklet that proclaims on the front "This is not a dream".
In it, it offers tip on how to handle a life-changing amount of money.
Secure the ticket
Fairbrother said many people spent some time carrying the ticket around before they claimed their win, because they almost could not believe it had happened.
"If you're telling everyone that you won but you haven't' secured your ticket then that can be a bit of a problem - perhaps if the ticket is suddenly not in the place you thought it was going to be."
If you aren't going straight to claim, keep the ticket somewhere very safe.
Deposit the money into a savings account
Lotto advises that the money should be paid into an interest-earning account while you work out your next steps.
If you win Powerball, it says, it can give you the details of the person at your bank who can help you with depositing the money.
Some people do not want this to go through heir local branch.
Think about who to tell
Lotto said people should carefully consider who they wanted to tell about their win.
Fairbrother agreed. He said if it became common knowledge, the money could change people.
"Especially big amounts of money. It might not be you, it might be the people around you who suddenly have their hands out thinking 'man, this is going to be good for me'."
People were likely to encourage winners to invest in various things, or spend their money in certain ways - he said these should be approached with caution.
Have a plan
Lotto advises that people think about what they want to do with their money, have a plan and list of goals and check in on it regularly.
Fairbrother said people could work with an adviser to talk through their ideas and come up with a strategy.
"Make sure you have got the right accountant and lawyer so that you're getting your structure right for tax and optimising what that looks like."
He said those discussions would usually involve talking to people about what was important to them.
"What are your overarching goals now you've won this money? It might be a million dollars, which is amazing. But it might be $44m, which is epically life-changing, isn't it?
"If you're living in a $600,000 home you might want to go and extend the house, build a tennis court and swimming pool, or sell it altogether.
"How much do you want people to know this has happened to you? If you go and sell your $600,000 house and buy a $4m house, people are going to start asking questions.'
An investment portfolio would be structured according to a person's wishes, he said.
Some might want to invest in commercial property, or a residential development including a number of homes.
"Or it might be saying I don't want to deal with any of that, I'm just going to put it into a managed portfolio,. It's going to be a mix of those things and it's going to be a steep learning curve. You don't need to go about it quickly, there's no point rushing and doing things fast."
Some purchases would be investments and others would depreciate, he said.
Knowing the difference would help to make wealth last.
"I knew of someone many years ago before I was a financial adviser, who a significant amount in Lotto and basically within three years he had got rid of it all by buying expensive cars and not understanding those expensive cars are going to be depreciating assets.
"By the time you drive it off the lot it loses 20 percent or whatever, then two or three years later it is down 60 percent."
Pay off debt
If you win a smaller amount than $44m, it usually makes sense to use it to pay off debt.
Fairbrother said people with a mortgage would usually want to pay that off. "That puts them in a whole different financial position going forward into the future where they're now able to save each month as opposed to paying the bank for their mortgage."
Be careful with gifting
Many people wanted to give money to others, Fairbrother said, particularly to help their kids buy houses.
"If you want to give it, it's better to do what they call an interest-free loan payable on demand.
"That means if there are problems in the future with their own relationships or whatever they might be, you can ask them to pay the money back. If you give a couple $100,000 then as soon as it goes into their account it becomes relationship property whereas if you loan it to them then you can ask to have to back again in the future."
Write a will
Fairbrother said as soon as people had that much money to their name, they needed to do some estate planning.
A will would be essential to avoid disputes if something happened to them.
"You're not going to end up with your children arguing over the fact you promised them more for any particular reason."
Tax
Lotto winners do not have to pay tax on their price, as in some other countries.
But they also cannot have it paid as an annual income, it has to be a lump sum.
You don't have to declare it as income if you're getting a benefit unless you receive the accommodation supplement, temporary additional support or special benefit.
But any income you make from your money will reduce your eligibility for support.
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