Setting up a Trust Could be the Smartest Choice a Lottery Winner Can Make
If you’ve recently had the good fortune of winning the lottery, your mind is likely swimming with mixed emotions. On the one hand, you’re extremely excited to finally be able to cash in your winning lottery ticket, but on the other hand you may be overwhelmed about what to do with the money, or weary of friends and family members coming out of the woodwork to become your new best friend.
One of the most important decisions you make after winning a lottery revolves around how the prize is claimed and whether you claim the prize as an individual or some type of entity, such as in the form of a trust.
Trusts are a useful investment tool for a variety of different reasons. Living trusts are typically used by individuals who are looking for a way for property to avoid the probate process when they pass away.
Trusts work by designating a settler, who is usually the trust creator, designating a trustee to run the trust, and beneficiaries who receive the benefit of property that is held by the trust.
A lottery trust is simply an industry term for a trust that is similar to a living trust in that the settler is the lottery winner, the trustee is typically an attorney or financial institution, and the beneficiaries are typically loved ones designated by the lottery winner.
With a lottery trust, the trustee must use the lottery winnings in the best interests of both the lottery winner and the trust’s beneficiaries. This can help to prevent money from being wasted or unaccounted for based on an array of issues such as overspending.
Another type of trust that can be created in the event of a large lottery winning is what is known as a blind trust, which gives total control over all assets to the trustee and does not offer any information to beneficiaries about the trust holdings or how they are distributed. In the event of a lottery win, family members could be set up with agreements where they receive a certain amount of money regularly over a set amount of time, but the beneficiaries will have no knowledge of how much money is in the trust, or how much money they’ll inevitably receive.
Depending on the state in which you live, you can have a trustee claim lottery winnings on behalf of the trust, and in some cases, keep the lottery winner’s name completely anonymous. While the majority of states require lottery winners to be publicly identified, Delaware, Kansas, Maryland, North Dakota, Ohio, and South Carolina still allow winners to be anonymous.
If you’re worried about protecting your future lottery winnings, it’s critical that you have an experienced team on your side that has experience helping others claim and maximize their lottery winnings.
At NuPoint Funding, we work with lottery winners who are looking to turn their structured settlement payment plans into lump sum cash payments, or who are looking to customize their winnings between the two options. Reach out to our team by phone today at 877-635-3150 or through our contact form to learn more.