Selling Lottery Winnings - A Few Tips.

So you've dreamed of the day when the Publisher's Clearing House would knock on your door with a huge check and a bottle of champagne. And, the chances are that, images of big homes and fancy cars, amongst other luxury items, danced through your head from time to time. Well, the big day arrives, you won the lottery but you find that in your particular part of the world, lump sum payments aren't allowed or you opted for the annuity only to later discover that you need to get your hands on a large lump sum of money for an emergency or just a vacation! It is your money; you should have options and thankfully most of the time you will.

When it comes to selling your lottery winnings, there are many companies out there that will purchase all or a part of your payments, commonly called annuities. However, how do you go about the process and what should you know before you do?

Taxes

The first thing you need to do before you commit to selling your annuity is check your tax liability. Whenever you receive a large amount of money, all at one time, Uncle Sam will want his cut. Talk to a tax or financial professional about your options before you agree to anything.

Rate

You will never be able to sell your lottery winnings for the full long-term value. You will be signing over the rights for annual payments for much less actual cash. One reason for the difference is to allow for inflation. For instance if you win a million dollars to be paid out over 20 years, today's actual cash value of the winnings will be around half a million; because as years go by prices go up. And, of course, the company buying your lottery winnings won't be doing it as a personal favor, they will want to see a healthy profit on their investment.

Companies

You have likely seen commercials or advertisements on television, in the media or online from companies offering to purchase your annuity or lottery winnings. Be sure to check these companies out; you do not want to be scammed out of what is rightfully yours. Before committing yourself to anything, do your research to ensure that the company you'll be dealing with is above board.

Compare the proposed payout from several companies before making your final choice. Each company will have its own rates and by comparing several of them side by side, you could end up being a few thousand better off.

Time

Please realize that this transaction will not take place overnight. It could take up to ten weeks before you receive your cash lump, sometimes longer. You need to bear this in mind, especially if you are looking at making a large purchase such as a home. This is a legal process and, as such, will not be quick.

Finally

You never know when you may need a lump sum payment from your lottery winnings. Purchasing a home, a medical emergency or school costs are all great reasons to consider selling your annuity. Remember however, what you will be giving up in the process. You have a specific guaranteed income and selling part or all of it should never be taken lightly.