We have all fantasized about what we would do if we were to win the lottery. Most of us have a similar plan: beautiful house, fancy car, and donating enough to become a household name with your favorite charity. While the odds are indeed slim, jackpots from games like MegaMillions and Powerball are in fact creating multi-millionaires through the simple purchase of a small computer generated ticket. So, the real question is, if you are one of the lucky ones, have you ever thought of what’s next?
The true tragedies are those stories about the lottery winners who end up filing for bankruptcy or who wind up in jail for tax evasion. Unfortunately, many lottery winners fall victim to the old adage, “more money, more problems.” Those individuals do not seek guidance from the team of skilled professionals required to protect and plan for such winnings: a cpa, financial planner and an estate planning attorney.
The first mistake individuals make is to look straight to the lump sum payout of a projected jackpot and settle on that being the amount of any winners’ bounty. The truth is, by extensive and proper planning, it is possible, whether by charitable donation, gift giving, or other trust planning techniques, to avoid some of the taxes imposed on your winnings.
More importantly, by winning the lottery, you are handed the keys to unlimited possibilities for yourself, your children, your family members and future generations. When you think about it, this is not much different than receiving a large inheritance from a family member or friend. The key is to be proactive. You need to have goals, whether charitable, legacy, or business themed. These goals should be reviewed with your financial and estate planners and a plan should be developed. Taking a chance of doing this on your own is a failing proposition.
If you do happen to come into wealth quickly, whether by the lottery or by an inheritance, don’t become one of the tragic stories of a winner turned loser. Be the individual who turns their winnings or inheritance into a sustained legacy or a charitable foundation to do good in this world for generations to come. Whatever your choice planning wise, don’t take the money and run! Stay, plan, and build upon your success.
- Adam Abramowitz, Esq.