It is not necessarily protecting the money from themselves, more about a gradual increase in income and the time given to learn how to become accustomed to it. Getting a large sum of money at once devalues it for some. When you have 10 million, handing out a 100k to close family members is not something that will always feels frivolous. But things can quickly add up.
The same can be done putting the bulk of the money into a long term CD and having the penalty for early withdrawals be the deterrent. But again, large sum in hand leads to different decision making than annual income. Granted you could sell off a portion for upfront money, so I guess there is no real safe situation.
As for financial planners, that is no guarantee either. Bad advice comes from a variety of sources. I highly doubt a majority of lottery winners don't look for financial planning. They just don't follow it. Or they choose higher risk investments because "I've got XX mil, what's 200k on a magazine investment!"
You can very easily make bad investments with the best of intentions.
Again, I have to disagree.* Someone who's careless with a $150,000 annuity is going to spend it*all very quickly indeed. By the time their next annuity payment comes - for one thing, they won't have a choice but to spend a chunk of it immediately because they'll be in debt. And even if that's not the case, or the debt isn't that crushing, it's simply unreasonable to suggest anyone has a chance of learning a lesson that takes literally*
years to teach.
A lump sum of several million can teach a better lesson far faster: the lottery winner with all of those millions instantly in the bank - or better yet, in some treasury instruments and maybe a slow-cooker index somewhere - only has to wait a few months before the*benefit of leaving it there becomes apparent: many millions
creates a whole lot of extra money just by being there. *So you have your lottery jackpot, plus you're earning as much as your annuity would've been on top of it. The only difference being that the lump sum will continue to earn forever.
Going the*other route, once your annuity*has paid off the total it stops, forever. If you've learned how to live on $150,000 a year that's going to be a bad day, because*the couple-to-few thousand a year you'd been setting aside all that time*may not add up to enough to keep earning $150,000 a year once the annuity stops.* So, you're either going to have to make a dramatic*quality of life reduction at that time, or you're going to have to resist any substantial quality of life improvement for many years after to your winnings, in favor of saving enough*each year that after 20 years you'll finally have enough*producing capital to start living better.
With the lump sum, you can start living better immediately without penalty, and the amount of money you can put away makes it more visibly apparent what money*that's been put to work is capable of doing.
As for financial advisers - I didn't suggest getting one of those; I suggested getting an estates lawyer, from a national firm. Maybe you want to invest some money eventually at some point; but*the best thing to do on day 1, before you even cash the ticket maybe, is*get structured and protected. The estates lawyer can teach you how to budget and "adjust" to that much income; it doesn't take years, it takes just a couple*hours of patient listening. Once you're informed the advantages of taking it easy are pretty obvious.
