5 biggest mistakes made by past lottery jackpot winners

With about $640 million up for grab in the Mega Millions jackpot, here is some good advice from a financial advisor:

1) Giving money away to friends and family members

The winner pays roughly 50 percent in taxes on the winnings, and then the recipient pays taxes on that money again (plus a higher rate on all their income). So a $1 million prize that was cut to $500,000 by taxes is cut again to $250,000 when the gift recipient pays their taxes. Financial planners say the best alternative is to offer to buy things for friends and family, even keeping those items in the winner's name.

2) Remember the money is not unlimited
Many lottery winners think anything above $1 million might as well be unlimited. That money can disappear quickly, and because there's no cash flow, every dollar spent is gone forever -- they're not replenished. That is unless you invest the money wisely.

3) Risky investments
Financial planners say lottery winners often invest in companies or ventures they may not understand. The best money spent is to first hire an attorney, then a financial planner. They can help structure trusts and investment strategies to help your winnings grow, while protecting them from the trappings of new-found wealth.

4) Burning bridges
Most winners immediately quit their jobs, often in spectacular fashion. Resist the urge to tell off your boss and coworkers. Given how many lottery winners end up bankrupt later on, you may need your old contacts when the money has dried up. Don't destroy all you worked for before you won. New-found wealth can lead to marital and relationship problems, as greed and envy often follow a big jackpot.

5) Carrying costs
So you've hit the jackpot, and you can afford to buy that multi-million dollar estate you've always wanted. Many lottery winners don't take into account the cost of upkeep and property taxes. How much will it cost to carry that home for a decade or more? A private jet sounds nice, but the $50 million sticker price comes with jet fuel costs, pilot salaries, landing fees, and hangar storage. Rent a plane when you need it instead!

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