1 Billion, Creating Potential Pitfalls for Future Winner

The Mega Millions jackpot has surged to a staggering estimated $1.1 billion after Friday's drawing yielded no ticket matching all six numbers. While smaller than last year's record-setting $1.6 billion grand prize, experts warn that the eventual winner may still face common pitfalls. The next chance to claim the life-changing jackpot is on Tuesday at 11 p.m. ET.

According to Mega Millions, the lucky winner will have two options for payout: a lump sum of $525.8 million or an annuity worth $1.1 billion. Both figures represent pre-tax estimates. The decision of which option to choose can have significant implications for the amount of taxes owed.

Andrew Stoltmann, a Chicago-based lawyer who has represented several lottery winners, cautioned against overlooking tax considerations. "None of these winners think about taxes until they have a third of it going right to Uncle Sam and the state government," he stated. It is worth noting that eight states, including California, Florida, and Texas, do not impose income taxes on lottery winnings. However, redeeming the winning ticket in a high-tax state where the ticket was not purchased could result in a larger tax bill. Opting for the annuity payout may save on future state taxes, depending on the winner's chosen residence.

Another crucial aspect for claiming the jackpot involves protecting the winning ticket. Mega Millions emphasizes the importance of signing the back of the ticket to "protect yourself." If the ticket is not signed, anyone who possesses it can file a claim and collect the prize. To ensure privacy, winners may consider claiming their prize money through a trust or limited liability corporation, although consulting an attorney is advisable.

Pooling money with friends or co-workers to purchase tickets can also lead to potential disputes. Stoltmann warned that problems arise when one person claims to have purchased the winning ticket alone. To avoid such disputes, he recommends having a written agreement that outlines who purchased the tickets, the numbers involved, and how the winnings will be shared among the group.

Meanwhile, the Powerball jackpot has also reached an enormous estimated $800 million following Saturday night's drawing, with odds of winning the grand prize standing at approximately 1 in 292 million.

Excitement continues to build as both the Mega Millions and Powerball jackpots reach astounding figures, offering a chance for individuals to secure life-changing sums of money. However, experts advise being mindful of potential pitfalls and seeking professional advice to navigate the complexities associated with claiming these extraordinary prizes.