Deisi Ocampo of Chicago received a pair of lottery tickets as a gift from her father on her 19th birthday, reports WMAQ-TV. She didn't have a chance to scratch them off until the next day, but when she did, she discovered that she was the winner of a $4 million prize.
Now that Ocampo -- a college student who works at a clothing store and lives with her parents -- has a little more money in the bank, what can she do to help make sure she makes the most of her newfound wealth? Here are four tips she may want to consider:
Set up a lottery trust. Creating a trust for your lottery winnings may have several benefits. First, it can prevent you from inadvertently or foolishly spending your money by controlling your access to it. A trust may also allow you to provide for family members or other individuals or organizations without creating disagreements by putting a trustee in charge of distributing funds to named beneficiaries. In some states, lottery prizes may be claimed on behalf of the trust, allowing the winner to remain anonymous. Finally, upon your death, the money in a trust can pass to beneficiaries without having to go through probate.
Pay your taxes. Not only do you have to pay tax on the lottery prize itself, but you will likely end up paying more in income tax at the end of the year because you're now in a higher bracket. Paying these taxes on time should be at the top of your list of things to do with your prize money. The IRS isn't going to forget about you, and penalties or even criminal charges may result from failure to pay.
Consider a P.O.D. account. If you are planning on keeping a large amount of your winnings in the bank, you may want to consider a P.O.D. (payable on death) account. Upon your death, the money in a P.O.D. account is payable to a named beneficiary without having to pass through the probate process.
Consult an estate planning attorney. Although no one wants to plan for the worst, when significant sums of money are involved, having an estate plan in place is essential for avoiding potential tax, probate, and family issues in the event that the winner dies or is otherwise incapacitated. An estate planning lawyer can help explain wills, trusts, and other estate planning tools that may be recommended.
As for Ocampo, what is the lucky teenager going to do with her prize money? She says she plans to use her winnings to complete her college degree and become a nurse.