Tonight’s Powerball lottery drawing is to be $1.6 billion, with an estimated cash value of $782.4 million. Let’s see, that’s $ 1,600,000,000.00 or $1600 million, with a cash value of $782,400,000.00 - lot’s of zeros, but still a LOT of money. What would you do with that much money? Last Wednesday’s jackpot was estimated at $1.2 billion, the second highest prize in history. Again, $1,200,000,000 is a lot of zeros. it’s $1200 million!
The largest Powerball to date is the January 2016, when three tickets won a $1.586 billion prize - $1586 million, split three ways = $528 million each.
Those long zeroed numbers are really big. What would you do with that money? The choices would all be yours. Some of the past winners have paid off debts, bought homes, or invested the winnings. Others have put cash towards building a water park, starting a professional wrestling organization for women, and another even gambled the winnings away, ending up living in a trailer park.
Another winner took 13 family members on a nice family vacation. They all meant well, right? What would you do with the prize money?
The first thing you’d have to do is pay income tax on the money. That could wipe out close to half the winnings right off the bat. The winnings mentioned above would be taxed at 37% on the amount above $525,000,000 or so, that’s tax of about $300 million for starters, mostly federal; then there’s state income taxes too.
The next thing you’d have to find is a safe place to deposit the winnings. Most bank accounts have a limit on the amount that’s covered by standard deposit insurance. Right now that’s $250,000 per account per customer. Let’s see, for $782 million, you’d need about 3200 accounts. What a bookkeeping nightmare that would be, but who cares? If you split it with your spouse, you’d only need 1600 accounts.
Let’s put it into some multifamily real estate…Here’s a 6 unit portfolio of multifamily in New York City for $99,000,000…96 units in Florida for $48,000,000…266 units in Arizona for $77,000,000…we’ve only got $558 million left. Let’s keep going. Wait, you mean I have to hire managers for all that property!?!
You thought you had trouble sleeping when you were waiting on your next paycheck! Now, can you imagine how it is that rich people live in a different world and are sometimes difficult to understand? What would you do with the winnings? Give it all away? How about if the prize were less money? Would you pay more for a ticket?
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