It’s been a weekly ritual for more years than you care to admit. Every Friday, you head over to the local convenience store to buy lottery tickets. Although you have your regular numbers, you sometimes let the machine pick for you. You’ve had a small hit here and there. One day, it happens. Whether you hit the Powerball® or Mega Millions® jackpot prize, your life has just changed. That said, why would you need an attorney when you win the lottery?
In this scenario, it’s you who is entitled to substantial winnings. However, what if you were part of a pool? There’s a chance that you and your work buddies all chip in to buy tickets when the pot is extraordinary. What happens next? Do you all head down to Pennsylvania Lottery headquarters to claim your check?
In either case, there is a concern. Did you know you have long lost relatives on the other side of the country? Or, others who have investments to offer you? Once your identity is revealed as a winner, you can bet that you’ll be deluged with calls and requests for money.
So, why not just stay anonymous? In theory, it’s a great idea. However, only six states permit such luxury. Unless you claim lottery winnings in Delaware, Kansas, Maryland, North Dakota, Ohio, South Dakota or Texas, the public may have a right to know who claims the larger lottery pots. In Pennsylvania, you will have to explore other means of protection.
Setting Up A Trust For Lottery Winnings
No doubt that lottery officials look to make a big deal of their winners to encourage future sales. Lottery tickets can be dream makers. However, in some cases, it makes sense to meet with an estate planning attorney and set up a trust.
It’s not a novelty concept at all. Earlier this year, news reports revealed that a Pennsylvania attorney representing a trust showed up to claim a $457 million Powerball® prize. No details were given concerning whether the trust was created for one person or would be shared with others. This tactic saved the winner from public exposure.
Multiple Lottery Winners
A trust may not be the best way of claiming lottery winnings when the ticket investment came from multiple sources. Some find that setting up a limited liability company (“LLC”) works better in such situations.
Truth be told, it’s not just anonymity that’s at stake. Pennsylvania is one of only a couple of states that does not tax lottery winnings. However, the IRS will still want their fair share. Obviously, you don’t want to saddle the person who purchased the group tickets with overwhelming tax liability.
When an LLC is formed, it defines the rights and responsibilities of all the participants. Once again, it also allows an attorney to appear to collect the winnings on the group’s behalf.
Congratulations! If you were lucky enough to win a substantial lottery prize, Fellerman & Ciarimboli would be pleased to provide you with legal advice. We look forward to hearing from you!