Hopes of Winning the Lottery? Here’s How to Stay Anonymous
What is more fun than imagining everything you can do with lottery winnings? Obviously winning the lottery and having that sudden inflow of cash would make life pretty exciting! If you were to win, suddenly managing money can be complicated especially with your friends and relatives asking for loans or gifts. Before we go through the steps of keeping your winnings confidential, first you need to sign and secure the winning ticket in a safe or lockbox.
Lawyers, Accountants, Planners and More
Each lottery has a deadline for when you must claim your prize, so time is on your side before you go on a spending spree. Before you rush straight to the lottery office, hire a few advisors such as an attorney, accountant, trust officer, etc. to learn about your options and what may be best in your situation. A trust officer can assist in the decision between taking the annuity payment option or taking a lump-sum payment, which will have tax and estate planning consequences this professional and an accountant can offer insight. A lawyer knowledgeable with estate planning can help draft paperwork for a lottery trust, where you can hire a trustee to help manage your winnings at your direction.
Why Might You Like a Lottery Trust? Anonymity, Avoiding Costs, or Expertise
When your winning numbers come in, it is time to be prepared. If your state gives out the names of lottery winners (as does Illinois), you are advised to stay out of the public eye as long as possible, or at least until you have a way to protect your money. While lottery winners can be found to be as unlucky as they are lucky with people asking for money or complexities that come with excessive wealth, the natural preference is to remain anonymous. While this is not easy, a lottery trust can be of great assistance.
Establishing a lottery trust can be done through a blind trust, revocable trust, or some other legal entity which can help avoid potential problems. While drawing up a trust, you must appoint a trustee who is the person responsible for managing the assets and making payments to beneficiaries and the IRS as instructed in the document. You can serve as the trustee, or you can have a professional, such as a trust department in a bank, carry this out. A professional will help protect your privacy as well as give additional insight and expertise. The main goal for setting up a separate trust or entity is to keep funds separate and conflicts to a minimum. While not everyone will need or want a new trust to manage their winnings, here are a few options you can think through:
In all but a few states, the law prohibits lottery winners from remaining anonymous. If you win big, long lost relatives may come asking for a loan of some type, or friends may ask for a small gift. If you establish a blind trust to claim the winnings, no one will know of your winnings unless you tell them. A blind trust is one where you are not involved in the day-to-day management or decisions. You gift your winning ticket to the trust, the trust then claims the winnings and invests the funds, without your input, in the most appropriate way possible. Since the winner isn’t involved in the decisions or investment management, it is best to appoint someone knowledgeable enough to handle these. This trust will keep everything confidential, and your attorney will tell you if a blind trust is an option in your state.
Also known as a living trust, placing funds into this type of trust will help the assets avoid probate when the lottery winner passes away. The trust is a separate entity, which the winner is still in control, which helps keeps funds separate. These trusts typically have the winners name and social security attached, so it is advisable to think through what a name could be along with applying for a separate Employer Identification number when creating this trust.
If you won the lottery along with some co-workers or other individuals, some other sort of entity might be in order, rather than a revocable trust. Depending on the rules of the particular lottery, only one entity may be eligible for the winnings. This may take the form of a general partnership, limited liability corporation, or a revocable or irrevocable trust. Unlike a revocable trust, the terms of an irrevocable trust cannot be changed, which makes sense if there are several parties involved. Irrevocable trusts allow the funds to be dispersed to each of the winners in the pool without having to simply rely on a single winner’s honesty (while avoiding the tax consequences of transferring the winnings to multiple parties). And since it may not be revoked or altered, it helps prevent future disputes among the parties.
First National Bank and Trust can help with all aspects of life, from buying your first home to managing your lottery winnings. Consider us to be a trusted resource for you and your family. The peace of mind that comes from having a one-stop-shop for all things financial planning is priceless.
Matt Riley was named Fiduciary Officer and VP for First National Bank and Trust Company in December 2018, helping clients to meet their prosperity goals through investment and estate planning. Prior to joining FNBT, Matt had risk and compliance analysis experience at State Farm Bank in Bloomington, Ill. Matt is a proud Illinois State University Alumni, receiving his B.S. in Finance with an emphasis in Financial Planning. He has continued his education journey, earning other designations including the Chartered Financial Consultant designation. In addition to his bank service, Matt became a member of the Clinton Rotary Club in April of 2019 and became a board member for the Warner Hospital & Health Services Foundation in May of 2019.
About First National Bank and Trust Co: First National Bank & Trust Company is a community bank located in Clinton, Illinois. Dedicated to community prosperity, the bank was chartered in 1872 under the name DeWitt County National Bank. The name was changed First National Bank and Trust Company in 1974, and was acquired by TS Banking Group in 2017. With $186 million in assets, First National Bank is dedicated to community reinvestment and gives 10% of its net income back to the community. For more information visit firstnbtc.com.
* Investment products are: Not a Deposit, Not FDIC Insured, Not Insured by any Federal Government Agency, Not Guaranteed by the Bank, May Go Down in Value
Have you ever dreamt of winning the lottery?! First National Bank and Trust can help with all aspects of life, from buying your first home to managing your lottery winnings.
How to Hire a Lawyer to Manage Your Lottery Winnings
What Can a Lottery Lawyer Do for Winners?
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If you win the lottery, you might think your biggest decision will be what to buy first. But the truth is, you’re going to need help to ensure that you keep as much of that money as possible to spend down the road. And the first step to getting that help is to hire a lottery lawyer.
What Lottery Lawyers Do for Jackpot Winners
Big lottery winners may feel overwhelmed by the number of decisions they have to make before they even claim a jackpot.
To make things even more confusing, each of the states that participate in the lottery has its own procedures for claiming a prize and for minimizing tax liability.
A lottery lawyer is part of the advisory team that winners should put together to help them wade through the intricacies of claiming a prize without making costly mistakes. A good lottery lawyer can protect jackpot winners, their families, and their hard-won cash.
Here are some examples of things that lottery lawyers can do for jackpot winners:
In some states let lottery winners claim their prizes anonymously. Others let winners claim in the name of a business, which can reduce the publicity they have to deal with. A good lottery lawyer can help winners protect their anonymity as much as possible.
Another option that many lottery winners have is to set up a trust to claim the prize. In many cases, a trust not only helps protect the winner’s identity, but it also prevents the winner from spending too much too quickly and it helps fend off requests for handouts and donations. A lottery lawyer can help determine whether a trust is advantageous for the winner and if so, can help set it up.
Putting Together a Trustworthy Advisory Team
The lottery lawyer isn’t the only important team member that a new jackpot winner needs. An accountant and a financial advisor with experience in helping people deal with large windfalls are also very helpful. A lottery lawyer can help winners pick the other members of their advisory team.
Advising About Payout Options
New lottery winners need to make the decision whether to take a lump sum or an annuity payout. A lottery winner can keep them apprised about the legal and financial ramifications of their choice.
Avoiding Common Mistakes
An experienced lottery lawyer also knows the pitfalls that inexperienced lottery winners can face. Lawyers can help their clients decide the proper moment to claim a prize, how to keep their tickets safe until then, how to avoid overspending, how to manage their safety, and more. If you don’t want to become a lottery curse victim, a lottery lawyer is a valuable ally who can help you create a strategy to manage your wealth safely.
Quashing Frivolous Lawsuits
Unfortunately, lottery winners can become targets for people who want to scam their way into some of their money. Frivolous lawsuits are one of the ways that unscrupulous people try to worm their way into unearned cash.
A lottery lawyer will not only defend winners from these lawsuits, but they also can anticipate the ways that winners are vulnerable and help them to avoid becoming targets.
How to Hire a Lottery Lawyer
Winners are going to be spending a lot of time with their financial team, so it’s important to find someone they trust and feel comfortable with. And of course, the lawyer should know what he’s doing and not be too expensive. So some of the things to consider include:
Experience: A good lottery lawyer knows the ins and outs of lottery law and has represented other big winners and people who have received unexpected financial windfalls.
Price: Even jackpot winners need to be careful not to overspend on legal fees. A more expensive lawyer isn’t necessarily a better lawyer. A good lottery lawyer shouldn’t offer to take a percentage of your winnings. Instead, you should settle on a reasonable hourly fee or retainer. Here are some ballpark figures for how much it costs to hire a lawyer.
Recommendations: Do some research to find out whether other clients have had good or bad experiences with any lawyers you are considering. If you don’t know anyone who has used them personally, an internet search might reveal compliments or complaints. There are also databases of respected lawyers that you can use, and you can ask any lawyers that you are considering hiring to give you references.
No Disciplinary Action: If a lawyer has had disciplinary action taken against him or her, you’ll want to know about it before you hire them. Luckily there are databases that let you check out the lawyers you are considering hiring so that you can look up disciplinary actions by state.
Personality: Don’t overlook your emotional reaction to any lottery lawyer you are considering hiring. You need to be able to trust the lawyer you hire and to feel good about working with them. Sometimes even very good lawyers just don’t mesh with your personality and vice versa, and that’s fine.
Once you know what you are looking for in a lottery lawyer, interview several different candidates to make sure you are finding the proper fit.
When Should You Hire a Lottery Lawyer?
If you win a large prize in a lottery, getting a good lawyer should be a priority. You’ll want to have representation before you tell anyone outside of your immediate circle of family and friends that you’ve won, and certainly before you claim your prize.
What's the first thing you should do when you win the lottery? Hire a lawyer! Here's what a lottery lawyer can do for you and how to hire one.