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FREQUENTLY ASKED QUESTIONS
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scroll through all the answers below or you may
click on
any individual question and go directly
to its answer
- How will my Cash Value be Determined?
- Do I have to sell all of my payments at once?
- Why would I want to sell my payments?
- Is there a maximum amount that you can fund?
- Can you buy lotteries in all states?
- Do I have to get approval to sell my payments?
- How long does it take to receive your quote?
- If I accept your offer, how long does it take to get my money?
- What documentation will I have to provide?
- I was a member of a group when I won. Can I still sell my payments?
ANSWERS TO QUESTIONS
- How will my Cash Value be Determined?
Your cash value will be determined the same way the lotteries calculate
theirs, i.e., your future payments will be discounted back at some
interest rate. When you take a cash value from the lottery it is often
less than half of the advertised prize value but it differs by state due to the
discount rate used and the life of the payments.
The important variable in the formula is the discount rate or yield used
to make the calculation. Again investors have different perceptions of the
risk involved by state and therefore use different rates. In addition,
most investors borrow a significant amount of the money they use to make
the purchase of the payments so they are somewhat at the mercy of the banks
lending the money and we all know how those interest rates can go up and down.
Rates are now at historical lows, so the value of your payments is relatively
high.The table below will give you some idea of the impact of the different
rates. Assuming a $1,000,000 prize payable in 20 payments of $50,000 each
the cash value would be as follows at different discount rates:
8% Discount = $491,000 cash value (49%)
9% Discount = $456,000 cash value (46%)
10% Discount = $426,000 cash value (43%)
11% Discount = $398,000 cash value (40%)
Please do not try to value your note with this table.The
yields required change constantly and this table is only intended to show you the
impact of changes in the interest rate. The only truly accurate way to find the value
of your payments is to request a free, non-binding quote by calling (800) 480-3928 or by using
our simple Online Submittal Form.
This table shows two things: First, it shows what the impact of rising interest rates could have
on the potential cash value of your payments. Secondly, the discounts are so large because the
payments received in the final years have so little present value, which is why it often makes sense
to do just a partial sale of your payments in the nearer years that are not discounted as much (See next question)
- Do I have to sell all of my payments at once?
No, and in fact, we don't recommend it for large winners. We will tailor our
proposal to you to meet your individual financial needs. Following are some
of the options available to you:
- Full Buyout - Sell all your payments
- Partial Buyout - Sell some of your payments (For example, all of the next 10 year payments)
- Split Buyout - Sell a % of some of your payments (For example, 50% of the next 10 year payments)
- A combination of Partial and Split Buyouts
Now lets see the impact by looking at the above example again. Lets assume the same
discount rates, but now we are only going to sell 10 years of payments and keep
the last 10 years of payments. Those results would look like this:
8% Discount = $336,000 cash value (Keep last 10 Payments of $50,000 each)
9% Discount = $321,000 cash value (Keep last 10 Payments of $50,000 each)
10% Discount = $307,000 cash value (Keep last 10 Payments of $50,000 each)
11% Discount = $294,000 cash value (Keep last 10 Payments of $50,000 each)
Looking at the 11% example, we sold half the payments (10 instead of 20) but we did not have to give up half the money; in fact we got
74% as much money compared to the sale of all 20 payments above ($294,000/$398,000).
To have a proposal tailored to your needs, call us at (800) 480-3928 or submit our
Online Form and describe which options you would like
to see in the description box. We will give you a preliminary proposal with several
options and then we can "tweek" these to meet your precise needs.
- Why would I want to sell my payments?
First of all, winning a big lottery is a tremendous event and care
should be exercised to ensure you will never have to worry about
money again. But still, the amount is so large it can make sense to
sell a portion if there is something you would really like now. Also,
it can make financial sense to do if you can reinvest the money at a
greater return than the yield % used to calculate your cash value. For example,
a down payment on a home in most markets would have created more money than
the total advertised lottery amount.
- Is there a maximum amount that you can fund?
If there is we have not found it yet.
- Can you buy lotteries in all states?
NO but most states have passed laws that allow the transfer of the
payments if certain guidelines are met. When you submit your request
we will inform you if there is a problem.
- Do I have to get approval to sell my payments?
In most states that accept assignment of the payments, you have to
receive court approval to complete the transaction. But this is
the good part--the investors in this field are very knowledgeable of
all the requirements in each state and will do everything needed to
effect the transfer, including petitioning the court.
- How long does it take to receive your quote?
We will normally have you a quote within 48 business working hours
of receiving your information.
- If I accept your offer, how long does it take to get my money?
Normally six to eight weeks but it is primarily a function of how long
it takes to get a hearing before the court and if the court is crowded in
your state, that can extend the period.
- What documentation will I have to provide?
A copy of your original award letter or congratulatory letter, a copy
of the payment schedule and the two most recent W-2G tax reporting forms
you received from the state.
- I was a member of a group when I won. Can I still sell my payments?
YES. We can arrange the purchase of a single member of a group without
affecting the other members of the group. Note also, that we keep all
transactions confidential.
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