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Lottery Lessons

Aired January 7, 2004 - 11:15   ET


DARYN KAGAN, CNN ANCHOR: Well, whomever ends up with the multimillion dollar jackpot might need solid financial advice. Financial planner Michael Boone is experienced in advising Lottery players who win big. He's joining us this morning from Seattle, where I bet it's still a little bit chilly there.
MICHAEL BOONE, FINANCIAL PLANNER: It actually is, yes, very much, and icy, too.

KAGAN: We'll have you do the weather in a moment. Let's talk money right now.

This must be a very intriguing story for to you watch, two alleged lottery winners. Any advice for the woman who is missing the ticket?

BOONE: You know, I think that any time there is that much money at stake, there is going to be a potential for controversy.

As I understand it, the woman has very good evidence that she's actually the one that -- the one that came forward has good evidence that she was the person. And I think that's all we can hope, is that the right person gets the money.

KAGAN: Let's talk about her, because she does seem to have a good head on her shoulders. Not only was she able to document very well and had her daughter along when she bought the ticket, but she took a few days to come forward, because she explained at her news conference yesterday, she talked to a lawyer, she talked to an accountant. This is a woman who did some good planning.

BOONE: Right, and that's exactly what we recommend. It's like there is any time in life that you come into a large amount of money or even just go through a very emotional time, we don't recommend making big decisions at that time without consulting with someone and taking a little bit of time to make sure you do the right thing. Professional advice, people who are used to handling large chunks of money can really be invaluable at that time.

KAGAN: The big sum, $162 million after taxes and everything, ends up being about $67 million, which is still plenty to have a good time.

BOONE: It's amazing. You know, one of the things we tell people is the easiest way to get $67 million is to start with $162 million. And then by the time that taxes shrink it, and then estate taxes could cut that in half again. So it would only be about $33 million. KAGAN: Let's talk about some dos and don'ts for this woman, considering that Rebecca Jemison will have all the cash at the end. What's a big do for her?

BOONE: One of the first things that's important is understand you're well over the insurance limit in any bank that you could possibly work with. So we recommend people put the money in U.S. treasury bills. It's absolutely guaranteed by the government. And then the next thing is really to think about your privacy, because everyone is going to be calling. I mean, people that you don't even know are going to come out of the woodwork looking for a piece of your money. So change your phone number. Get a post office box. A lot of things that just take a lot of the pressure off of you, that if you don't do that, you're just going to be inundated by that.

KAGAN: And I think also we had on this do list, something that she already came up with. She obviously is consulting professionals, and you also say take a chunk, go have some fun, don't blow the whole thing, but if you're not going to have fun with it, kind of what's the point.

BOONE: Exactly. This is your money. This is supposed to be a fun tile. Don't let the fact that you've got so much money weigh you down, and you can start to feel the weight of it. Go out and have a little bit of fun with it. Take a chunk of money and spend it. If maybe you get a little bit regretful about how fast you went through, that's OK. That will really come in helpful to make sure that the rest of the money gets preserved.

KAGAN: Any don't out there.

BOONE: Don't sign any contracts to guarantee that money to one person. There was a winner down in Texas a couple of years ago that essentially lost an entire sum of money. It's tied up in court. If anyone is guaranteeing huge rates of return, don't have anything to do with them. I think those are the biggest things.

KAGAN: And finally, of course you're a professional financial planner, and I don't think if you just did consultation to lottery winners, you would have enough of a practice. You deal with regular people too.

BOONE: That's absolutely right.

KAGAN: And financial planning really shouldn't depend on winning the Lottery.

BOONE: No, you know, I think Henry Ford said something really wise, he said money doesn't change a man, it simply unmasks him. So you're not really going to be changed in a fundamental sense. The same sort of person that you are, the same sorts of decisions you would make today in your own personal financial planning would be the same sorts of things that you would do if you won a lottery. And so really concentrate on planning and being wise with the money that you do have. And then if you ever get fortunate enough to do that, you'll be well positioned to handle it. KAGAN: Do you play Lotteries?

BOONE: No, you see, I think the deal, Daryn, is you're supposed to win the lottery and you're supposed to hire me to help you.

KAGAN: Oh, that's how it works, and that's how you cash in on the lottery.

BOONE: Right, that's the part I'm good at.

KAGAN: Tell you what, when I win the big jackpot, you're the first call I make.

BOONE: And I'm looking forward to getting that.

KAGAN: Looking forward to winning. Michael Boone, thank you.

BOONE: Thank you very much.


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