The reason why people take cash instead of the installment payments is the UNITED STATE FEDERAL ESTATE TAX imposed upon the estate of the decedent, due and payable nine months after death in CASH. The IRS calls the payments Income in respect of a decedent, you own it and anything you own in included is the asset calculation that will be subject to the estate tax.. which can be as high as 50%.
The problem arises in that the estate does not have the cash on hand because it is coming in future down the road payments but the estate tax is payable NOW. Taking the winnings in cash will not eliminate the estate tax but the money is there to deal with the IRS in the ninth month when the estate has to make the estate tax payment.
And at that point I don’t care anymore.
Anyway, I just hate to give up that much money. The current PowerBall is $171 Million. Cash Value is $97.6 Million.
So you’re giving up almost 43% of your winnings, about $74 Million by taking the Cash Value.
They invest that money and it costs them nothing to pay you your jackpot over 30 years. It is false advertising to say it is a $171 million jackpot. If it was anybody but government doing it they would be up on charges.
If you take the $97.6M and invest it wisely, the cash flow over 30 years may be significantly more than what you lost by not taking the annuity.
Then again, "wisely" does not describe the average winner.