What now? Answering the £161m question
WHO hasn't wondered in their quieter moments what they would do with a multi-million pound windfall? Colin and Chris Weir were doubtless among the daydreamers - until they scooped the 161 million Euromillions jackpot.
The prize, the biggest ever in Europe, propelled the Largs couple straight on to the rich list. But with great wealth comes great responsibility: for all the dreams of worldwide travels and a life of luxury, their first challenge is working out exactly what you do with 161m.
1. Take a deep breath
Keeping it quiet - a tactic recommended by all of our experts - is no longer an option. But there's no need to rush into any big decisions, said Bryan Johnston, senior divisional director at Brewin Dolphin, who advised taking time to absorb the enormity of the windfall.
"There is a temptation to tell the boss to go forth and multiply, buy a shiny new motor car and take the family off to the sun. Don't. Winning the lottery may be life-changing, but a large capital sum can be rapidly eroded if there is no other source of income. The best piece of advice, therefore, would be to take your time and take advice."
Alex Montgomery, head of asset management at Turcan Connell, suggested viewing the win as a traumatic event, albeit a positive one.
"It is very likely to disrupt many aspects of your life - particularly your relationships with friends and family. Many people will begin to see you as a potential source of cash to solve their own problems, so take time to think about what's important to you and which relationships are most important to you," he advised.
"Develop an initial plan, which should probably involve 'parking' your lottery funds until you have had time to think through all of the consequences of your changed circumstances."
2. Get advice
The most important step before embarking on any big financial decisions is to find a fee-based chartered or certified financial planner, argued Iain Wishart, owner of Wishart Wealth Management.
"The winner could probably afford to employ full-time a well-qualified and experienced planner or IFA to run their investment portfolio 24/7, 365 days a year and put their best interests at heart," he said.
The Weirs will also need specialist tax and legal advice. Montgomery recommended first choosing a principal "key trusted adviser", such as a lawyer, financial planner or accountant.
"Work with them to pull in other niche specialists to ensure all the requirements are covered by people with the appropriate level of expertise."
3. The basics
The first financial measure is to deposit the money. However, they should avoid leaving more than 85,000 with one bank, to keep within the threshold guaranteed by the Financial Services Compensation Scheme.
Wishart added: "As the financial strength of many banks is still very dodgy, I'd look to diversify the money away into securer areas and tax structures quickly."
But what happens next depends what they want to do with your windfall.
"They should look at what they need to do lead the life they want for the rest of their lives. They would be able to go to town, but there is a limit as to what you can spend money on," said Wishart. "Using sophisticated cash-flow modelling, once the winner and all of their family and friends are looked after, consideration could be given to gifting funds to charity and other worthwhile causes."4. Invest it
This can be tackled once the fundamental decisions have been made, such as what they want to do now and how they envisage spending the rest of their lives.
Johnston said: "A fund of this size is genuinely a platform for a change in life's direction, but that change should be taken -like the turning of an ocean liner - slowly and carefully with all parameters considered. Take into account risk. Circumstances - both personal and markets - can change and it is important that this is also considered."
They may feel there's no need for an investment plan, given the size of the prize pot, but that would be a mistake, according to Lesley Collins, chief executive at Edinburgh Investment Consultants.
Collins, who has advised previous lottery winners, said the principles of financial planning remain the same. "Set aside immediate access to cash, invest in wrappers which provide favourable tax efficiency for growth and income needs and make sure that you maximise all of the tax-free allowances available."
5. Keep it out of the taxman's clutches
The actual prize money isn't taxed, but HM Revenue & Customs will keep a close eye on how it is spent. Investments or income arising from investing the capital sum will be subject to either income tax at 50 per cent or capital gains tax (CGT) at 28 per cent. On top of that, 40 per cent of their estate will be taxed on death, unless plans are put in place.
Paula Fraser, director of tax at Grant Thornton Scotland, said: "The Weirs have expressed an interest in donating some of the money to a charity and this gift would be exempt from inheritance tax.
"But if they choose to invest the money, their estate may be hit with a massive inheritance tax (IHT] bill, unless they choose to make substantial capital gifts. They would have to survive these gifts by seven years in order to avoid an IHT charge, so it's imperative they update their wills."
They should also be canny in the way they go about sharing their wealth with others. "If they acquire assets and then gift the asset, for example a house, then this gift may be subject to CGT. The best practice is for them to give the relative cash to buy a house, but they do need to live for seven years to avoid the IHT pitfall," said Fraser.6. Charity choices
Charities are usually among the beneficiaries of a big lottery win, with most previous instant millionaires diverting some of their cash to charitable causes. But it's not as easy as sending a cheque to the chosen charity when the sums involved are this big.
Johnston recommended setting up a charitable foundation with a portion of the winnings that might be perceived as surplus to requirements.
"Under the auspices of OSCR, the official Scottish Charity Regulator, a fund could be established which could be administered by the winner, directing support to charities and good causes in which they are interested," he said.