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C a l i f o r n i a l o t t e ry

Winners Handbook

$87 million

A group of 13 Starbucks employees shared $87 million on October 21, 2000. Living by the company motto One team, one purpose, the manager, Mary Champaine bought one ticket for each member of her team.

Youve Won THe LoTTerY

So what happens next?

Winning a large lottery prize can be a wonderful experience as you suddenly nd yourself presented with new opportunities and the nancial resources to live the life of your dreams. As you can see by the photos in this publication, Lottery winners come from all walks of life.
General Questions . . . 3 Estate Planning & Forms . . . . . . . . . 9 Assignment of Prize Payments . . . . . . . . 10 Public Disclosure . . . 11 Managing Your Winnings . . . . . . . 12 Winners Checklist . . 16 Lottery District Ofces . . . . . . . . . . 17

Acquiring a large sum of money gives a whole new meaning to how you live your life and manage your budget, as long-term investment strategies become a way of life for you. Planning for the future by making informed responsible decisions will help you enjoy your prize winnings to the maximum. Winning the Lottery is an exciting and lifechanging experience with many winners reporting several weeks of sleeplessness. Carmen and Al Castellano are the winners of $141 million, However, when the the largest individual prize in California Lottery history. excitement dies down, managing your winnings will become a way of life for you. provides important tips on how to get started Consider your good luck from a long-term in managing your nances. perspective. Talk to several professional This Winners Handbook answers 20 basic quesadvisers and carefully consider the nancial tions Lottery winners ask. Please take the time options available to you before making any to read this handbook thoroughly. If you have decisions. Charles Jaffe, personal nance further questions, you may contact the appropricolumnist with the Boston Globe newspaper, ate California Lottery ofce listed on page 16. provides winners with tips on how to pick a Most importantly, dont make sudden changes; nancial adviser and covers nancial issues take all the time you need. Most of all, enjoy you may want to consider, as you become your winnings! accustomed to your prize winnings. Mr. Jaffe

$141 million

General questions

GeneraL quesTions

When Do I Receive My Checks?

Your rst payment will be available within six weeks from your claim date for pick-up at a nearby district ofce . You may choose to have a Lottery agent accompany you to your bank or nancial institution . If you choose your SuperLOTTO Plus or MEGA Millions payments to be paid in annual installments, future payments will be sent close to the anniversary date of the winning draw . If you won a prize of a million dollars or more on The Big Spin show, you will receive equal annual installments over 20 years close to the anniversary of the winning date . Weekly winners will receive 52 weekly installments each year for 20 years . Payments can be mailed directly to your home address or to your nancial institution at your request . For additional information contact the Lotterys Investments Ofce listed on page 16 .

SuperLOTTO Plus and MEGA Millions jackpot winners have 60 days to choose the cash option or 26 annual payments . If you do not chose a payment option within the 60 day time period, you will automatically receive your prize in 26 annual payments . You may select the payment option by lling out a California Lottery Jackpot Prize Payment Form . You have the option to ll out this form at the District Ofce when you claim your prize or you can have the form sent to you . The form must be notarized and returned to the Lottery within 60 days, a time period which begins on the date that your claim is authorized for payment by the Lotterys Security Division . This is normally within a day or two of you claiming your prize . Group winners of a jackpot prize must all choose the same payment option . If you choose the cash option, this amount will be less than the announced jackpot . For example, if the announced jackpot were $7 million, the winner would receive about $3 .7 million less the federal tax withholding . This example is based on the average market costs, as of December 2006, of 26 annual payments funded by the U .S . Treasury Zero Coupon bonds . If you choose the annual payment option, based on a $7 million SuperLOTTO Plus jackpot, you will receive a rst payment of $175,000 or 2 .5% of the jackpot less taxes . But, over the course of

How Does The Lotterys Payment System Work?

The California Lottery pays winning SuperLOTTO Plus and MEGA Millions jackpot prizes either in 26 annual payments or a lump sum equal to the cash value of the jackpot prize . If you chose the cash value, you will receive the present cash value of the announced jackpot in one lump sum . This amount will be less than the announced jackpot .

General questions

the next 25 years, these payments would gradually increase each year until the nal payment of $357,000 or 5 .1% of the prize is reached, providing a hedge for inflation over time . MEGA Millions jackpot prizes are paid out in 26 equal payments (in thousands) . Any residual amount is calculated into the rst payment . If you are a winner of a million-dollar prize or more from The Big Spin show, you will receive your prize in 20 equal annual payments . Grand prize winners from our weekly Scratchers games will receive 52 weekly installments a year for a period of 20 years . Grand prize annuity winners from other Scratchers games will receive installment payments as specied in that game prole .

For example, on a $1 million Big Spin prize, there is approximately $500,000 cash (approximately one-half of the entire prize amount) available for the purchase of the bonds worth $950,000 at maturity . The rst payment of $50,000 to the winner is added to $950,000 to equal the full value of the prize . The California Lottery purchases bonds with the available cash . A portion of the principal plus the interest accrued over the next 19 years makes up the annual payments to the winner . After the 20th payment, the full prize amount of $1 million has been paid and no funds remain in the account .

Who Receives The Interest Earned On This Prize Money?

Will The Lottery Pay Individual Prizes To Group Winners?

If you are a winner who receives payments in installments over time, you receive the interest earned on the bonds purchased by the Lottery for the payment of the prize . The Lottery currently purchases U .S . Treasury zero-coupon bonds (government securities) to secure the future payments of your prize . Together the principal and interest earned by these bonds over a specied time make up the full amount of the prize . In effect, each year a portion of the securities mature and make up that years payment .

California Lottery regulations allow for the individual payment to members of a player group who win a Big Spin, SuperLOTTO Plus or MEGA Millions prize, as long as the group consists of 100 or fewer winners . If you are a Lottery group member, you may claim your winnings on a Lottery Multiple Ownership Claim Form available at any California Lottery District Ofce . All district ofces are listed on page 17 . The decision to claim your winnings as a group must be made at the time you claim your prize . Group Winners must all choose the same payment option .

$315 million
"The Lucky 7, Joyce Onori, Jennifer Habib, Kate Lynn Juergens, Brenda " Heller, Mariza Cuya, Kathy Jones and Bob Guerzon each spent three dollars on tickets for the November 15, 2005 MEGA Millions Jackpot. The seven co-workers claimed the largest jackpot ever won in California Lottery history, $315 million.

General questions

What Will I Pay In Taxes?

Lottery prizes are exempt from California state and local personal income taxes . However, the Internal Revenue Service (IRS) requires the California Lottery to withhold taxes from prizes over $5,000 for U .S . citizens and resident aliens who provide social security numbers on the Lottery Claim Form . The IRS also requires the Lottery to withhold additional taxes from all prizes of $600 to $5,000 from U .S . citizens and resident aliens who do not provide a social security number . Claimants who do not mark the citizenship status on the Lottery Claim Form will have 30% withheld from all prizes over one dollar . Winners paid in annual installments automatically have taxes withheld from each annual payment . The withholding rate for federal income tax is based, in part, on your resident status . The Lottery is now required to withhold federal taxes

of 25% for U .S . citizens and resident aliens providing a social security number, and 28% for U .S . citizens and resident aliens not providing a social security number . Federal tax rates are subject to change . There is no change to the tax-withholding rate of 30% for non-U .S . citizens, non-resident aliens or if citizenship status has not been provided to the Lottery . Tax withholding amounts are not generally designed to meet a winners total tax liability. There may be an additional tax liability depending on a winners total financial situation. Contact a professional tax adviser to help you determine your total tax liability. The Internal Revenue Service (IRS) has prepared the State Lottery Winners brochure to provide guidance on the federal income tax responsibilities . For a copy of this brochure, please contact the IRS at 1 (800) 829-100 .

How Does A Player Group Divide The Tax Liability?

Jackpot group winners, regardless of payment choice, may use the Multiple Player Ownership Claim Form permitting each group member up to 100 members to receive individual payments . Group winners must all choose the same payment option . Groups of single payment prizes that do not qualify for individual payments by the Lottery should elect a group representative to le a

Lottery Claim Form to receive and distribute the prize to the other group members . In order to accurately assess the tax liability, the Internal Revenue Service provides IRS Form 575 for this purpose . IRS Form 575 must be led with the California Lottery by December 31 for the tax year in which the prize was paid . Using the information provided on the IRS Form 575, the California Lottery will issue an IRS W2 G Form to each individual or group member receiving individual payments by January 31 of the following year .

$72 million
On March 17, 2007 this lucky group of state employees dubbed the "Sacramento 20" won a $72 million jackpot at Sacramento's lucky retailer Lichine's Liquor and Deli.

General questions

What Do I Need From The Lottery In Order To File My Tax Return?

Is It Possible To Receive More Than One Annual Payment In The Same Tax Year?

As a California Lottery winner, an IRS W2 G Form will be mailed to you by January 31 for the previous tax year . This form reports the amount of your Lottery winnings and must be led with your federal income tax return . You should also keep a copy for your records . Please remember to notify the Lotterys Tax Unit or Investments Ofce if you have changed your address .

If you claim a large prize paid in installments in late December, you may receive the rst and second payments in the same tax year because your rst payment may not be issued until January . Although this will only occur during the rst year, you will need to plan for the tax liability of receiving two Lottery prize payments in one year . This can also occur if your payment is delayed into the next tax year for failure to respond to our annual conrmation letter .

Can A Lien Be Filed Against My Winnings?

$3 million
On April 7, 2007 Claude Coleman, owner of a medical assisting school, spun a cool $3 million on the "Big Spin" wheel.

Judgment liens, tax levies, or offsets may be led against your prize winnings by creditors or government agencies for payment of your debts . Any such offsets will be deducted from your next installment payment and the remainder, if any, will be mailed to you . The lien, levy, or offset may continue from year to year until the debt is paid in full .

estate Planning & Forms

esTaTe PL anninG & Forms


What Happens If I Die Before I Receive All The Payments?


In the event of your death, any remaining installment payments will be paid to your heirs . Your estate should contact the Lotterys Investments Ofce immediately .

Can The Lottery Assign Prize Payments To A Trust Established By A Winner?


How Can I Designate A Beneficiary For My Remaining Prize Payments?

You may designate one or more beneciaries by ling a Lottery Beneciary Designation Form . Upon your death, the Lottery will pay the remaining installment prize payments to whomever is named on the form . This form is available from the Lotterys Investments Ofce . Beneciary changes can be made at any time by ling a new form . If there is no Lottery Beneciary Designation Form on le at the time of death, the Lottery will make payments according to Lottery Commission policies and regulations .

The Lottery will make the installment payments to your qualifying trust, provided you have properly assigned your prize according to the guidelines . Declaration and Assignment of Lottery Prize to Revocable Living Trust Form can be requested through the Lotterys Investments Ofce . For the Lottery to make payments to a trust, the prize winner must establish the trust as well as be a trust beneciary . The trust must be governed by the laws of the State of California . Upon a winners death, and provided prize payments were properly assigned, the trustee must notify the Lottery of the winners death and of the proper distribution of the payments under the trust . The Lottery may make payments to irrevocable trusts or subtrust(s) which were established in a winners qualifying trust so long as the appropriate form is on le prior to the winners death . If this form is not on le, the California Lottery will make payments according to the Lotterys policies and regulations .

assignment of Prize Payments

a s s i G n m e n T o F P r i z e PaY m e n T s

Can I Assign My Prize Or Sell It To Another Party?

Winners of prizes paid in weekly or annual installments may assign future prize payments (except payments during the nal 3 years) to a third party or use their winnings as collateral for a loan . If you are planning to assign your prize payments there are specic regulations that affect this process . Please contact our legal department for specic information .


$1 million

Companies may contact you offering to purchase some or all of your remaining installment prize payments . Past winners have informed us that some companies have misrepresented themselves as the California Lottery, claimed to have the Lotterys endorsement, or implied that they received condential personal information about prize winners from the California Lottery . Be assured that the California Lottery does not endorse any of these companies or disclose personal information about prize winners other than the winners name and the retailer location where the ticket was purchased . The Lottery encourages you to seek independent nancial and legal advice before making any assignment decision . If you decide to assign your right to receive future prize payments or use your winnings as collateral for a loan, please contact the Lotterys Investments Ofce . The Internal Revenue Service (IRS) has prepared the State Lottery Winners brochure to provide guidance on the federal income tax responsibilities . For a copy of this brochure, please contact the IRS at 1 (800) 829-100 .

Martha Long and family became ecstatic after winning $1 million on The Big Spin show on April 27, 2002.

Public Disclosure

PubLiC DisCLosure

What Personal Information Is Subject To Public Disclosure?

As a state agency, the California Lottery is subject to public disclosure laws that allow access to certain governmental records . Your name, the name and location of the retailer who sold the winning ticket, the date you won, and the amount of your winnings, including your gross and net installment payments, are matters of public record and are subject to disclosure . The Lottery may release additional information if legally mandated or upon your request .

$49.5 million
Aspiring actress, Robynn Newton and her fianc Wesley Dorffi display an oversized check after winning a $49.5 million SuperLOTTO Plus jackpot.
1 1

managing Your Winnings

manaGinG Your WinninGs


What Should I Do With The Prize Money While Im Seeking Professional Financial Advice?

nancial advisers and hire more than one at a time . Although the Lottery does not endorse any advisers or any advisory group, lists of advisers can be obtained from the following sources: The California State Bar or your local County Bar Association MartindaleHubbell Directory (for attorney referrals see your phone directory or local library) The California Society of Certified Public Accountants (16) 441-1, National Association of Personal Financial Advisers (800) 66-22 or (888) -66, The Financial Planning Association (800) 4-42, While some past winners prefer to research their own nancial options, others report that building a team of advisers who work together and are experienced in working with large sums of money has provided them with sound legal and financial advice .

Your rst instinct may be to deposit the rst payment of winnings safely in a financial institution while you plan your nancial future . Your current bank or credit union is a good place to start, but be sure to verify that the amount of your deposit is federally insured . If the amount of your deposit exceeds the level of insurance, consider dividing your prize funds between two or more nancial institutions .


How Do I Find Reputable Advisers?

Banks and other nancial institutions offer a variety of options . To receive maximum benet from your Lottery prize, you should check the credentials of prospective advisers and interview them to determine if their nancial approach ts with your needs and lifestyle . There are professional organizations listed in every telephone book that can provide you with the names of advisers, including accountants, attorneys, and investment counselors . Remember that you can change

The Boston Globes personal nance columnist Charles A . Jaffe offers important tips: The single most important decision you make with your newfound wealth will not be how to spend or invest it. It will be who you hire to help manage it. Sudden money makes you an instant candidate to hire a nancial adviser . For starters, you are likely handling much more than you have ever had at your disposal before . More important, you want to make sure your once-in-a-lifetime good fortune becomes a rest-of-your-lifetime benet . You most likely have heard stories of athletes, rock stars and celebrities who wound up losing their fortune at the hands of an unscrupulous agent or rogue stockbroker . Your windfall puts you in the big leagues, in terms of the potential to become a victim . That being the case, there are several factors to keep in mind as you choose an adviser: Interview three to five before making a decision, with at least one candidate having no strings attached.

The reasons you hire an adviser to protect and grow your money, make sure that you have properly insured yourself, planned for your estate and more are standard fare for good advisers . That means that the rst person you talk to will sound like they are a tailor-made perfect t for your needs, even if they are mediocre and inexperienced . Make sure you have a basis for comparison, that you know not just about the services you will get for your money, but about how comfortable you are with the adviser personally . If you interview top advisers, what will make one stand out is not so much expertise all good advisers have it but your comfort level and condence in them . You may get referrals from friends and relatives, but you will want to have at least one candidate who you have never met before . This makes sure that your feelings for an adviser arent colored by the fact that hes your nephew, your best friends nancial adviser and so on .


managing Your Winnings

Look for an adviser who deals regularly with this kind of money, and preferably with clients who suddenly come into money. Ideally, you want to hire an adviser familiar with the kinds of situations youll be facing . That means someone whose average client already has the kind of money you have won, and preferably with people who came into that money quickly . You dont want to be someones guinea pig, their rst shot at handling the issues from investing large sums to estate planning that will soon be among your major concerns . Consider building a financial team. You dont see famous wealthy people like Donald Trump or Warren Buffett managing their money alone . They have a team of advisers who handle everything from the legal to the investment to the tax sides of the issues . Remember that you are new at this, and your winnings dont guarantee that you will make great decisions . Building a team and the members should not all work for one rm allows you to have multiple advisers . While the nancial planner might handle the strategy, the accountant can make sure everything is proper from a tax standpoint . The best part of a team approach is that you can bounce around ideas, giving you a better chance to determine if anyone is steering you wrong .

Be sure that the following questions are at least a part of your interview with each candidate.

How does your compensation work? Find out how the adviser will be paid commission, flat-fee or some combination and precisely how much money they will make in dollars if they work with you and implement a nancial plan . What services will I get for my money? May I see a sample plan? Before hiring an adviser, make sure you see what you actually get for your money . Will anyone else be working with me, or will I always deal with you? How do we terminate this relationship if I am not satised?


What is your basic approach to nancial planning? What is your educational background and what professional designations do you hold? How much education must you undergo to keep those credentials, and how will that expertise benet me?

You Should Also Consider:

You are hiring help, not surrendering control . Just because you pick a nancial planner doesnt mean you will be uninvolved in managing your money . Instead, you should be involved in all key decisions, and your desires even if they disagree with the strategy of the adviser should be carried out .

Changing your phone number or using a phone answering machine or answering service to screen your calls . The same is true for your mail . A post ofce box will also help you screen unsolicited requests . If requests do come by phone, ask that the request be put in writing and that the requester send background literature to your post ofce box . Using an intermediary such as an attorney or an accountant to act as your spokesperson when responding to requests and to intercept information from various organizations is recommended . A knowledgeable adviser can also help you with the income tax implications and advise you on the allowable limits of charitable donations and contributions .


How Should I Handle Requests For Donations?

Many winners have shared their winnings with their favorite charities . You may receive requests for donations from many sources, including friends and family, or individuals from organizations or charities that are unfamiliar to you . Take time to investigate the legitimacy of any organization or charity before you make a donation . One way to do this is to request a nancial statement . To ensure the charity is authorized by the state, you may check their 501(c)(3) status .


Winners Checklist

Winners CHeCkLisT

What Do I Need To Do If I Want Future Payments Mailed Directly To My Financial Institution?


What If I Change My Address?

Your rst Lottery prize payment is available for pick-up within 6 weeks of your claim . Future payments can be mailed directly to your home address or your nancial institution for deposit into your account . At this time, the Lottery does not offer Electronic Fund Transfers (EFT) . For more information, contact the Lotterys Investments Ofce .

Be sure to notify the Lotterys Investments Ofce in writing immediately with any changes to your name, address or telephone number to ensure timely delivery of your annual payment and IRS W2 G Form .


Who Do I Call If I Have Any Questions?

The Lottery does not offer nancial or legal advice, but will provide you with information or forms you need to facilitate your planning . Public Affairs Office . . . . . . . . . . (16) 24-6 Investments Office (for installment winners) . . . . . . . . . (16) 24-14 Legal Office . . . . . . . . . . . . . . . . . (16) 24-206 Executive Office . . . . . . . . . . . . . (16) 2-040


$91 million
Patricia Frierson won a $91 million Super LOTTO Plus jackpot on August 9, 2003.

Lottery District Offices

LoTTerY DisTriCT oFFiCes

Central Valley
750 W . Pinedale Ave . Fresno, CA 93711 (559) 9-2

San Diego
5656 Rufn Road San Diego, CA 92123 (858) 92-1700

Santa Ana
300 West Warner Ave ., Suite F Santa Ana, CA 9270 (71) 708-050

Inland Empire
180 Commerce Center Circle, San Bernardino, CA, 9208 (909) 806-126

San Francisco
820 Dubuque Avenue So . San Francisco, CA 9080 (650) 875-2200

Santa Fe Springs
976 Norwalk Blvd . Santa Fe Springs, CA 90670 (562) 906-6356

598 North 10th Street Sacramento, CA 9581 (916) 322-5136

East Bay
289 Industrial Parkway West Hayward, CA 955 (510) 670-631

Van Nuys
16525 Sherman Way, #C-10 Van Nuys, CA 9106 (818) 901-5006

Headquarters Ofce
600 North 10th Street Sacramento, CA 9581 1 (800) LOTTERY

California Lottery 2007


California Lottery 2007