Powerball Privacy Protection – Forming a Massachusetts Lottery Trust
With a record $1.5 Billion prize on the horizon for tomorrow’s Powerball draw, we’re naturally cashing in on the action with this timely article about forming a Massachusetts lottery trust. A lottery trust is a simple instrument, really, designed simply to preserve anonymity for the lottery winner. And for anyone who’d like to avoid hearing an endless parade of sad stories from new and old acquaintances and friends, the lotto-trust (not a legal term) is an absolute necessity.
How Does it Work?
Like any trust, this year’s lottery trust must have three elements: A trustee, the corpus or property of the trust, and a beneficiary. The trustee (or trustees) holds legal title (i.e. official control) over the corpus. The beneficiary holds equitable title (i.e. ability to enjoy) the corpus. In most Massachusetts lottery trusts, we’ve seen professional attorneys act as Trustees. Hiring an unaffiliated attorney for this purpose ensures not only that outsiders would not be able to identify the winner, but also that the winnings are held by a professional with fiduciary experience (and preferably protected by a professional liability insurance policy).
The trust can be written so that the beneficiary will be paid as much as he or she requests at any given time, giving the lottery winner actual control over the whole amount. In fact, if drafted correctly the beneficiary could potentially liquidate the trust as soon as the money is transferred into the trust. The key, of course, is to preserve anonymity upon receiving that original award. As an extra step in this process, it is recommended to also obtain a separate tax Id number from the IRS, rather than use the winner’s social security number.
Having put even the most simple trust in place, the winner can avoid any media attention, harassing phone calls or even hard feelings from friends and coworkers. The attorney-trustee simply visits the office in Braintree, gets his or her picture taken and drives off with a big check to deliver to the beneficiary.
Additional Benefits of a Trust for Lottery Winnings
Apart from anonymity, a trust can provide additional support to an individual (or a family) that may want to protect the money from their own bad habits. Drafting the trust in such a way that restricts the trustee from accessing principal, and paying beneficiaries only the trust income, is actually a common practice in traditional trusts. To avoid unforeseen circumstances, the trustee could be empowered to distribute principal at his discretion “for the health, well being and maintenance” of the beneficiaries.
While reducing taxes might be a goal that most lottery winners desire, there really isn’t much a trust can do in this respect. For any prize over $5,000, the Massachusetts lottery commission must inform the IRS of the award. Further, it will ensure that the form W-2G, complete with a social security number and 25% of the prize, is sent to the agency. Should the trust begin to generate income from year to year, it is even possible that the trust would be a disadvantage. One exception to this would be for purposes of estate taxes, but that is the subject of an entirely different article. And in any case, this is actually a conversation that necessitates CPA attention and input for each particular individual.
Accounting for Multiple Winners of a Lottery Ticket
It is often the case that a Powerball or other lottery ticket holder has pooled resources and formed an agreement with a bunch of friends or co-workers. While we hope this agreement was in writing to begin with, the trust can be an extremely valuable tool to ensure that everyone of the “winners” is treated equally by an independent and disinterested third party trustee. In this way, since no one of the actual partners holds the keys to the prize proceeds, an extra layer of protection is achieved.
What Are the Drawbacks of a Mass Lotto Trust?
While there really isn’t any downside for the lottery winner, there are general concerns that many in government and the public have with this practice. One of the main requirements for a successful lottery is that it be transparent, so that the game players are confident the process is fair. The public needs to know that prizes are not being awarded to government insiders, or worse still, employees of the lottery commission itself.
Why Don’t All Winners Form One?
While there is no clear answer to this question, one could speculate that the reason is the same as why so many lottery winners go bankrupt; that they are generally unprepared. Like any financially successful individual, the most common trait for any lottery winner that preserved his or her winnings has a lot to do with the formation and adherence to a solid plan. A 2001 study cited in US News and World Report found that on average, lottery winners kept only $0.16 of every dollar won, and that bankruptcies for many of these folks is quite common.
All of those trends and statistics aside, the use of lottery trusts in Massachusetts is reportedly on the rise. The Massachusetts Lottery spokesman, Christian Teja, was quoted as saying that “Typically, people are choosing not to have a spotlight on them and trying to maintain a level of privacy, and it is completely within the legal boundaries. All the better for our clients.
To learn more about lottery trusts, or what kind of safeguards can be put in place within one, please don’t hesitate to call our office.
Powerball Privacy Protection – Forming a Massachusetts Lottery Trust With a record $1.5 Billion prize on the horizon for tomorrow’s Powerball draw, we’re naturally cashing in on the action with
Massachusetts State Lottery Lawyer
Offices in Hingham, Plymouth, Brockton and Holliston
One of the most frequent pieces of advice new lottery winners get from others is to try as hard as possible to remain anonymous.
If your name and photograph is published, there’s a strong chance you could find yourself quickly harassed with calls and requests for money.
Unfortunately, there are only seven states in which you have the legal right to remain anonymous: Delaware, Kansas, Maryland, North Dakota, Ohio, South Carolina and Texas.
Still, there are ways you can protect your anonymity if you live in Massachusetts.
Create a Lottery Trust
In Massachusetts, winners can use a lawyer to create a lottery trust and represent them when claiming their prize at the Massachusetts state lottery headquarters in Dorchester. Legal representation will help to keep their identity anonymous.
Protect your Identity
The lucky lottery winner should take several steps to protect their anonymity.
1. Sign the ticket correctly
If you wish to remain anonymous, call or text us right away (781-996-5656) to speak with a lottery attorney on how to create a trust and then sign the ticket in the name of the trust. The longer you leave the ticket unsigned, the more you risk someone taking it and claiming it for themselves. If you must sign it before the trust is created, sign it small so you can leave space to add trustees and the name of the trust you’ll establish.
2. Hire an attorney
Massachusetts lottery attorneys at Baker Law Group specialize in trusts and are well-versed in Massachusetts lottery winnings laws. They provide professional legal advice to help you through the process.
Your lottery attorney can assist you with the following:
- Establish one or multiple trusts to handle the winnings
- Ensure the winning ticket is signed correctly to establish ownership
- Represent you and the trust at the Massachusetts State Lottery office to accept the winnings on your behalf, keeping your identity private
- Upon request, recommend a financial planner who can help you determine how to handle taxes, gifts, and charitable donations
3. Don’t tell anyone
Keeping the lottery win a secret is probably the hardest step of all for most lottery winners. Obviously, winning the lottery can be an exciting, life-changing moment. But as soon as you tell even one other person, the chances of the word getting out greatly increases.
Contact Baker Law Group
Our experienced Massachusetts lottery attorneys can help to protect your identity and your winnings, whether it is PowerBall, Mega Millions, Megabucks, Lucky for Life, The Numbers Game, MassCash, Keno, or a scratch ticket, contact.
To remain anonymous, call or text us right away to speak with a lottery attorney on how to create a trust and then sign the ticket in the name of the trust.