What is the best method of sharing your lottery winnings with family?
Question by Chris G: What is the best method of sharing your lottery winnings with family?
Everyone says that if they win a large lottery like the powerball or megamillions, they will give $ 1 million to this person, $ 500k to this person, etc.? But in reality, I do not believe that is the best method since there are taxes to deal with and I am sure other items I am not aware of? Does anyone have professional advice or an educated guess as to the best method in accomplishing this task after such a windfall?? Thanks!
Best answer:
Answer by Vince M
We’ve already planned how we’d deal with winning a big payoff and how we’d deal with family.
We will move to Australia and change our names. Once a year, at Xmas, we’ll send nice gift baskets to our kids and grandkids … anonymously.
Seriously, there is no “best” method for sharing winnings with family. Everyone’s situation is different. We have one daughter with two of our grandkids. Both parents work and are frugal enough to make it well, but not a LOT of liquid savings. Another of our daughters and her hubby also work, earning NICE salaries, and enjoy spending their money. They don’t live lavishly and are generous with friends and family, but they don’t regret having nice vacations and occasional luxury nights out on the town. They have no kids. We have a son, and he and his wife both work. They choose to plow money into improving their home and making it a nice place to live. They enjoy the finer things, but know how to “shop” and save up for those nice things.
For all three of them, their situation is different. Were my wife and I to share a big lottery payout, I’m sure you’d understand that each of those families have different needs. Wouldn’t it make sense to provide for our GRANDCHILDREN’S future? Wouldn’t it make sense, also, to provide security for my wife and my future? We are BOTH retired and have to make do with Social Security and small pensions. Do we owe anything to our in-laws, including our drug and alcohol addicted brother-in-law, who lives a thousand miles away with his wife and three kids? Or another in-law who lives comfortably with his wife? Or my own sister who hasn’t worked in two years, but has given up looking for a job? Or the various nieces and nephews and assorted kin all over the map?
What might be the “best” method for me may not make any sense for you.
In my opinion, one of the “best” methods is to leave certain amounts in trust funds, payable to the youngest relatives when they reach the age of eighteen, where they decide to strike out on their own, or go on to higher education. However, this strategy is less than adequate when dealing with a relative who has an immediate and pressing need for funds right now.
Just remember, it’s YOUR money, and, no matter how YOU decide to share, you will NOT be able to please EVERYONE who thinks they didn’t get what they deserve. Whether you share or don’t, however you dole out your money, someone will resent it. Be ready for that.
Maybe I’ll run into you “Down Under.”
If you want to give a certain amount of money right when you win, you can all collect on the winning ticket together and the lottery commission will write you each seperate checks. That way you’re only paying taxes on it once. Usually when groups of people win together, they hire a lawyer to make the arrangements.
The fact that you took the time to write out this question means you’ve already spent way too much time thinking about it.
You aren’t going to win huge on the lottery.
If you did, worry about it then (and believe me, you won’t have to worry about it)
You could form a trust or corporation to claim the winnings and give family members access to the trust funds or to the corporation perhaps in the form of a corporate credit card for expenses or a salary from the corporation.
In the unusual event that you do win a multi-million dollar jackpot, you can afford to see a tax attorney first to sort out how best to share your wealth with your family, minimize taxes and preserve anonymity. You should always buy the tickets with the annual payments since you could still ask for the payment as a cash value option but if you selected the cash value option, you would have no choice but to take the cash value option. The Tax attorney could work out which would be best when the claim is actually made, meanwhile just keep your options open.
There’s a lot that can be done using corporations and trust funds to provide yourself and your family with a good standard of living without spending your new found wealth too quickly and these methods can be employed even without a sudden windfall such as with a lottery but so few people even think about it till it’s too late.
You took the words right out of my mouth, LegFuJohnson. “Best Answer” should go to him, even though I know you won’t give it to him because you are delusional.
You will NEVER have to worry about this “problem”.
Open a one million dollar joint account under all family member names, give them each a check book and tell them to only withdraw what they really need.