Million-Dollar Lottery Winners Face New Financial Decisions

by Mark Friedman  on Monday, Jan. 16, 2012 12:00 am  

Lottery tickets at the Site store on the corner of Cantrell Road and Kings Row Drive in Little Rock. (Photo by Michael Pirnique)

Even before she redeemed the $20 Diamond Dazzler lottery ticket worth $1 million earlier this month, Ruth Simcox of Cabot had consulted with a financial adviser, or so she told the director of the Arkansas Scholarship Lottery.

Simcox, the 12th Arkansan to win $1 million or more since the ASL began selling tickets in September 2009, declined to be interviewed by Arkansas Business. But financial advisers say the Arkansas Children’s Hospital nurse did a smart thing by getting professional assistance from the start.

Like the 10 others who won $1 million, Simcox received a payout of $680,000, which is what’s left after 25 percent is withheld for federal taxes and 7 percent for state taxes. (One of those wins is in dispute and the money is in escrow. See Who Should Get a $1 Million Jackpot?.) And another Arkansan appears poised to join the winner’s circle. The ASL announced late Wednesday that a $1 million Powerball ticket was sold at a Kroger in west Little Rock. As of Thursday morning, the winner hadn’t cashed the ticket.

Harold Bailey of Conway is by far the biggest winner so far: He won $25 million from a Powerball game in 2010 and elected to take his winnings in a lump sum of $12.15 million rather than have it paid out over 29 years. After withholding taxes, Bailey walked away with about $8.3 million.

Big wins, the advisers say, especially by people of formerly modest means, are fraught with problems that range from overblown expectations to guilt-inducing relatives with their hands out.

“The first battle that they are going to face is the psychological battle,” said Kristina Bolhouse, vice president of Arkansas Financial Group Inc. of Little Rock. “If they’re not used to dealing with large sums of money, their first thought is not going to be investing their winnings. It will be, ‘What can I do with it?’”

And a little of that might be OK. Wealth manager Barry M. Corkern of Little Rock said he could encourage a winner to use $50,000 for wants.

“But that’s all you get,” Corkern said.

Within months of winning $1 million, Gene Simpson of Independence County did what he had always dreamed of: He took nine family members on a weeklong vacation to Hawaii.

The 73-year-old insurance agent also used money he won in April from a $10 raffle ticket to renovate his home and buy a car for his wife and truck for himself.

“We got everything done that we would ever want,” Simpson told Arkansas Business recently.

Simpson said he never thought about getting financial advice before going on his spending spree.

 

 

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