Most of us have driven down the freeway and seen the billboards displaying one lottery jackpot or another, momentarily getting lost in the thought of what we would do with a sudden windfall. The reality of winning the lottery, however, is not as simple as it might seem. Those who do beat the odds must contend with complex taxation issues that most of us will never brush up against, while others prefer to take a number of extra steps to ensure they are able to maintain as much privacy as possible about their winnings.
Lottery trusts can offer a number of protections to those who choose to use them. In broad strokes, suddenly coming into a large sum of money, or a significant annuity, can cause unanticipated chaos in many areas of your life. Many people find that it is easiest to enjoy their new assets if they have a little separation from them. This separation can help keep them from quickly depleting their funds, as well as help them maintain relationships with others who may try to siphon money off of them.
California does not allow lottery winners to claim their winnings anonymously, but placing the funds into a trust can put a few extra layers of protection between a winner and those who might target them because of their good fortune.
Truthfully, winning the lottery is a double-edged sword that must be handled very carefully. If you have experienced an unexpected windfall like winning the lottery, you should not hesitate to seek out qualified legal counsel who knows how to build a strong estate plan to capitalize on new-found wealth. With the guidance of an experienced attorney, you can avoid many of the common pitfalls that ensnare lottery winners, and enter into a new season of life confidently.
Source: findlaw, “Lottery Trusts,” accessed Feb. 07, 2017