Be Careful What You Wish For

A man is never on trial as in the moment of excessive good fortune.

   - Lew Wallace (1827-1905), American writer, statesman

Sometime earlier today the AOL Welcome Screen featured a story, actually a rather sad one, about people who have won the lottery. It seems to have disappeared from the screen as I write this, but I think the link still works. If it doesn't you can try this one over at Yahoo! Finance. I believe it's still up.

I've never known anyone who actually won the lottery, so I have no personal knowledge about what happens to a person when they suddenly come into tons of money. Ellen Goodstein has done some research though, and what she has discovered should make anyone think twice about the potential downside of striking it rich. Just listen to some of the stories:

"Winning the lottery isn't always what it's cracked up to be," says Evelyn Adams, who won the New Jersey lottery not just once but twice (1985, 1986) to the tune of $5.4 million. Today the money is all gone and Adams lives in a trailer.

Adams couldn't say no to those who wanted to share in her good fortune nor could she stay away from the slot machines in Atlantic City.

Perhaps if the prize were larger a person could hang on to enough to still call himself wealthy. William Post won $16.2 million, three times more than Ms. Adams, yet today he lives on his Social Security:

"I wish it never happened. It was totally a nightmare," says Post.

A former girlfriend successfully sued him for a share of his winnings. It wasn't hisonly lawsuit. A brother was arrested for hiring a hit man to kill him, hoping to inherit a share of the winnings. Other siblings pestered him until he agreed to invest in a car business and a restaurant in Sarasota, Fla.,--two ventures that brought no money back and further strained his relationship with his siblings.

Within a year, he was $1 million in debt.

Missourian Janite Lee won even more than Mr. Post--$18 million to be exact. Alas, she too was unable to manage her windfall:

Lee was generous to a variety of causes, particularly politics, education and the community. But according to published reports, eight years after winning, Lee had filed for bankruptcy with only $700 left in two bank accounts and no cash on hand.

Ms. Goodstein relates account after account of lottery winners who hit the jackpot, enjoyed their new wealth for a short time, then found themselves entangled in financial nightmares that ultimately resulted in the loss of all they had won. How does something like that happen?

Goodstein cites financial expert Susan Bradley who tells us that many lottery winners go broke:

Going broke is a common malady, particularly with the smaller winners. Say you've won $1 million. What you've really won is a promise to be paid $50,000 a year. People win and they think they're millionaires. They go out and buy houses and cars and before they know it, they're in way over their heads.

She says there is an emotional connection to the windfall that many winners fail to address:

There are two sides to money. The interior side is the psychology of money and the family relationship to money. The exterior side is the tax codes, the money allocation, etc.

The goal is to integrate the two. People who can't integrate their interior relationship with money appropriately are more likely to crash and burn.

Often they can keep the money and lose family and friends--or lose the money and keep the family and friends--or even lose the money and lose the family and friends.

The bottom line (no pun intended) in all this is that being really wealthy is much more complicated than most of us would ever believe. Should you ever be fortunate enough to suddenly become the lucky recipient of mega-millions, Ms. Bradley suggests that you immediately set up a decision-free-zone:

Take time out from making any financial decisions. Do this right away. For some people it's smart to do it before you even get your hands on the money.

People who are not used to having money are fragile and vulnerable, and there are plenty of people out there who are willing to prey on that vulnerability--even friends and family.

It's not a time to decide what stocks to buy or jump into a new house purchase or new business venture.

It's a time to think things through, sort things out and seek an advisory team to help make those important financial choices.

Good luck. Now excuse me. I've got to go check my PowerBall numbers.