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Experts torn on how to handle Powerball dough

July 29, 1998

photo: KEVIN G. GILBERT / staff photographer

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Powerball PlayersBy CLYDE FORD / Staff Writer, Charles Town

MARTINSBURG, W.Va. - Cash payment or annuity?

With the Powerball jackpot at $250 million, a lot of people are contemplating whether they would want a one-time payment of $137 million or if they want $250 million spread out over 25 years.

Financial and legal experts are split over which is best.

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"I like the cash payment. However, most people would not be able to handle that much in a lump sum at one time," said Edward Slonaker, a certified financial planner with the Morgan Financial Group of West Virginia in Martinsburg.

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"For someone who is a little more progressive with tax planning and risk-oriented in terms of investment philosophy, I'd always take it as a lump sum," said John M. Everson, senior financial adviser with American Express Financial Advisors in Martinsburg.

Everson said he's known of people who have received a large sum of money from an inheritance or an insurance settlement and then spent it right away.

Even with a large sum like $89 million, "there would be people who would figure out how to spend it within five years," Everson said.

"I'd be tempted to take it over 25 years. It's guaranteed money. There's a built-in interest," said Dennis Parsons, a certified public accountant in Bunker Hill, W.Va.

The $250 million would pay out about $6.55 million a year after federal and West Virginia state taxes were deducted, said West Virginia Lottery spokeswoman Nancy Bulla. The $137 million would be reduced to about $89 million after taxes.

In Powerball, players choose five white numbered balls from a pool of 49 and a red ball from a pool of 42 numbers.

Financial experts said many people probably could make more than $250 million if they took the cash payment and invested it wisely.

"I'm not a big annuity fan," said Martinsburg attorney Laura Rose. "I believe people can invest their money and be in control of their own destiny."

Many of the financial experts said they are not playing the lottery.

"I've never played the lottery. The odds aren't very good," Everson said. "If I'm going to give my money away, I'm going to give it to charity so I can at least get a tax write-off."

"I take enough risks as it is," Rose said.

The odds for hitting the six numbers are 80-million-to-1.

The financial experts said they have some ideas on how the winner should spend the money.

"I'd advise somebody to first get an army of attorneys and accountants," Parsons said.

Martinsburg attorney David Greenberg said the winner should first see a financial adviser and donate some money to charity.

"Whether it's $250 million or $1 million or $50,000, it's just managing your money and doing what you feel is right with it," Greenberg said.

Everson said the prize money would not be enough to buy the Washington Redskins, but the winner could probably buy an island in the Caribbean.

"You could build a high school for your community, a new park. You name it," Everson said. "I hope whoever comes into this windfall is the kind of person who is charitably inclined. Your imagination is your only limitation."

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