Ahh, one of my favorite "what if" games.
I guess it depends on if it's the lump sum payment, or the 25-year annuity. I'm always conflicted on which to choose. If it's lump sum, the amount is actually only going to be a little over half the jackpot amount. I tend to find myself waffling on which to choose. I mean, I could take that 50-60% that would be the lump sum payment and invest it for more than double over 25 years, so I'd end up having more money in the end. But the annuity has its advantages too.
What I wouldn't do is buy a big extravagant house. I would buy several modest houses or condos in places in which I would like to divide my year up. Hawaii, here in Oregon near my husbands family, a small place in Michigan to stay when I visit my family. An apartment in New York. London. Maybe someplace on the Med, if I really wanted to be extravagant. And we'd set up our "permanent" home in New Zealand or some other small democratic nation, because we really don't feel like the U.S. is a country that particularly represents us as citizens. Sure, any country will have some element of that, no place is perfect, but there are others that we feel suit us better.
If it's the annuity, a portion of the annual payment would have to be invested so that when the 25 years are up, the income to which we have become accustomed doesn't just completely go away. See to our kid(s) education, and live comfortably, with the means to travel and vacation. I'd set about learning all the things I have always wanted to learn, or to be better at. Singing, dancing and acting lessons, for starters. I might subsidize a small local theatre company.
If it's lump-sum, each of us (me and Mr. Ambrya) would get a percentage of the money to divide up amongst his/her relatives, whether by giving them gifts or just giving 'em cash. Since they aren't making any more land, I'd probably use my share to buy each "family" of my grandmother's descendants a moderate house in which they may live rent-free, so all their own income can go much further. I would also set up college funds for all the children, or "getting started" funds for those who go another route than college.
I could go on, but the kid is wanting food now.