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Interview with Michael Boone

Aired December 26, 2002 - 14:37   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


KYRA PHILLIPS, CNN ANCHOR: Standing by in Hurricane to find out who that winner of the Powerball ticket is. We are going to bring it to you live as soon as it happens. We are going to meet him, his family, hopefully, find out what he is going to do with all that cash.
Meanwhile, did you get what you wanted for Christmas? Well, the winner of this Powerball jackpot sure did, nearly $315 million. Now, that's a lot of holiday cheer. So how would you handle a wad of cash like that, and make sure you never need money again?

For some tips, let's go to financial planner Michael Boone in Seattle, Washington -- hi, Michael.

MICHAEL BOONE, FINANCIAL PLANNER: Hi, Kyra. How are you?

PHILLIPS: Very good, thank you for being with us. Besides drinking probably about three bottles of champagne, what would be the first move that this family needs to make? I mean, obviously, find an adviser that they trust, and how do you do that? They must be getting chased.

BOONE: Absolutely. The phone will just absolutely start ringing off the hook immediately as soon as the winner is notified, and we recommend as soon as they pick themselves off the floor from the shock and give thanks, that they find a trusted adviser. Hopefully, they have a relationship with someone now, an attorney, a CPA, someone used to handling negotiations, and also someone to run interference between themselves and everyone else who will be calling.

PHILLIPS: And once they find a broker with whom they trust, don't sign anything, right? You don't do contracts or paperwork. I mean, this is something that's got to be an honest relationship.

BOONE: Absolutely. The real key is not to rush into anything. This could be an extremely emotional decision, and the first thing that you want to do is not necessarily the wisest thing. So give yourself some time. Don't sign any contracts. Work with someone directly to help you get started, but don't commit to anything right away.

PHILLIPS: How do you protect yourself from all your new best friends, and these family members that come out of the woodworks?

BOONE: You know, that's a good question. It's amazing the kind of phone calls people get from people they haven't heard of -- from years who want just $20,000 or $50,000 just to get them through a tough period of time. We strongly recommend that you work with an adviser who will run interference, and we get to play the bad guy sometimes for people. They'll say, you know, I would love to do this, but my adviser recommends against it, and I'll go with his advice.

PHILLIPS: So where do you start? I mean, how do you make this money last for the rest of your life, even let it go on to your kids and your grandkids?

BOONE: You know, that's really key. A lot of people want to establish some charitable benefit, not only for their family, but for some charities, and we help people set up a charitable foundation, something that can give for generations to come, educational, religious, perhaps. Benefits to pay for college education, or house down payments for kids or grandkids or nieces or nephews. All of that can be established in due time.

PHILLIPS: Are you talking bonds, are you talking mutual funds?

BOONE: Generally, we'll recommend government bonds in terms of building a base, because they're absolutely safe, and then some tax- free bonds if someone is in a high tax bracket, and then begin to invest in stocks and real estate above that.

PHILLIPS: How about estate taxes?

BOONE: Huge issue. You notice that the winning was $315 million, and I think the first shock people get is when they realize that they actually only won $112 million. Almost $200 million or more goes to taxes, and that's if you're living. If you were to die shortly thereafter, after the shock of winning such a huge award, another 40 percent to 50 percent could disappear before your heirs got to it.

PHILLIPS: Well, is it better to get this money in a lump sum or in payments? What are the pros and cons of each?

BOONE: Well, obviously, the advantage in payments is just that it stays there. As you know, people are very well known to just burn through a large amount of money in a short period of time and not have anything left. With the payments, at least you have it.

The disadvantage, of course, is you don't have the ability to earn interest on that money for a number of years. We generally recommend that people take the lump sum, we'll build investment portfolios and set up charitable trusts for their advantage.

PHILLIPS: Financial planner Michael Boone. I have a feeling we are never going to have money like that, but the advice is good. Hopefully they're listening.

BOONE: Thank you.

PHILLIPS: Thank you.

BOONE: Nice talking to you, Kyra. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired December 26, 2002 - 14:37   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: Standing by in Hurricane to find out who that winner of the Powerball ticket is. We are going to bring it to you live as soon as it happens. We are going to meet him, his family, hopefully, find out what he is going to do with all that cash.
Meanwhile, did you get what you wanted for Christmas? Well, the winner of this Powerball jackpot sure did, nearly $315 million. Now, that's a lot of holiday cheer. So how would you handle a wad of cash like that, and make sure you never need money again?

For some tips, let's go to financial planner Michael Boone in Seattle, Washington -- hi, Michael.

MICHAEL BOONE, FINANCIAL PLANNER: Hi, Kyra. How are you?

PHILLIPS: Very good, thank you for being with us. Besides drinking probably about three bottles of champagne, what would be the first move that this family needs to make? I mean, obviously, find an adviser that they trust, and how do you do that? They must be getting chased.

BOONE: Absolutely. The phone will just absolutely start ringing off the hook immediately as soon as the winner is notified, and we recommend as soon as they pick themselves off the floor from the shock and give thanks, that they find a trusted adviser. Hopefully, they have a relationship with someone now, an attorney, a CPA, someone used to handling negotiations, and also someone to run interference between themselves and everyone else who will be calling.

PHILLIPS: And once they find a broker with whom they trust, don't sign anything, right? You don't do contracts or paperwork. I mean, this is something that's got to be an honest relationship.

BOONE: Absolutely. The real key is not to rush into anything. This could be an extremely emotional decision, and the first thing that you want to do is not necessarily the wisest thing. So give yourself some time. Don't sign any contracts. Work with someone directly to help you get started, but don't commit to anything right away.

PHILLIPS: How do you protect yourself from all your new best friends, and these family members that come out of the woodworks?

BOONE: You know, that's a good question. It's amazing the kind of phone calls people get from people they haven't heard of -- from years who want just $20,000 or $50,000 just to get them through a tough period of time. We strongly recommend that you work with an adviser who will run interference, and we get to play the bad guy sometimes for people. They'll say, you know, I would love to do this, but my adviser recommends against it, and I'll go with his advice.

PHILLIPS: So where do you start? I mean, how do you make this money last for the rest of your life, even let it go on to your kids and your grandkids?

BOONE: You know, that's really key. A lot of people want to establish some charitable benefit, not only for their family, but for some charities, and we help people set up a charitable foundation, something that can give for generations to come, educational, religious, perhaps. Benefits to pay for college education, or house down payments for kids or grandkids or nieces or nephews. All of that can be established in due time.

PHILLIPS: Are you talking bonds, are you talking mutual funds?

BOONE: Generally, we'll recommend government bonds in terms of building a base, because they're absolutely safe, and then some tax- free bonds if someone is in a high tax bracket, and then begin to invest in stocks and real estate above that.

PHILLIPS: How about estate taxes?

BOONE: Huge issue. You notice that the winning was $315 million, and I think the first shock people get is when they realize that they actually only won $112 million. Almost $200 million or more goes to taxes, and that's if you're living. If you were to die shortly thereafter, after the shock of winning such a huge award, another 40 percent to 50 percent could disappear before your heirs got to it.

PHILLIPS: Well, is it better to get this money in a lump sum or in payments? What are the pros and cons of each?

BOONE: Well, obviously, the advantage in payments is just that it stays there. As you know, people are very well known to just burn through a large amount of money in a short period of time and not have anything left. With the payments, at least you have it.

The disadvantage, of course, is you don't have the ability to earn interest on that money for a number of years. We generally recommend that people take the lump sum, we'll build investment portfolios and set up charitable trusts for their advantage.

PHILLIPS: Financial planner Michael Boone. I have a feeling we are never going to have money like that, but the advice is good. Hopefully they're listening.

BOONE: Thank you.

PHILLIPS: Thank you.

BOONE: Nice talking to you, Kyra. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com