I won't even pretend to be an expert in the lottery. I am also admittedly foolish with my own money! But when a lottery prize gets big enough, I know exactly what my first steps will be. I have identified my personal counselor and trustee to handle the purse strings--and while he's a lawyer, he's not a lottery expert, either!--and my personal attorney to help me hire the experts. These are two people I trust implicitly, and I know that if I retain them as counsel, they will keep my identity to themselves. I also know a longtime accounting executive whom I trust to refer me to a lottery-expert colleague (and to keep it to herself!).
You may be wondering how long that secret can be kept? If you live and win in Kansas--unlike many states--you can elect to keep your identity a secret. And while I would advise a person to construct a trust (or several) to receive funds, it turns out that only an individual person can claim the actual prize. For that reason, the Kansas Lottery advises that you go ahead and sign that ticket! But maybe don't run right out and claim it without reading on.
How to Hire a Personal Attorney
To say that winning the lottery is a life-changing event is an understatement. It is important to take steps to protect your winnings and your future, much as you would before getting married, after losing a spouse, or being charged with a crime. And how do you do that? That's right: reach out to your personal attorney. A personal attorney can help you with many aspects of your newfound wealth, including acting as a stand-in when hiring experts, explaining complex agreements and documents to you, and acting as a sounding board when making important decisions.
If you do not currently have a personal attorney, begin thinking about how to hire one before you win. And if you have a personal attorney already, consider whether you want them in your new circle of trust.
Get recommendations from friends, family, or colleagues. . . cautiously. It is a good idea to ask people you trust whom they recommend for an attorney who specializes in estate planning and asset protection. Just be cautious how you do it! Perhaps you want to allow the first few days' excitement to pass, secure your ticket in a safe place, and wait for the next news cycle. Consider approaching your more well-off friends with something like, "I have a family member looking to set up a complex trust, and I don't know the first thing about them. Do you know of anyone who has had a great experience with a lawyer?" You also want to listen for any clues about office staff and how candid (or loose-lipped) they might be. While attorneys are bound by confidentiality, they are still human beings being entrusted with a huge secret.
Interview several attorneys before making a decision. It's important to find an attorney with whom you feel comfortable, whom you can trust to protect your interests. Listen to your instincts. This person may be involved with you and your potential problems for a long time, so realize that you are looking for a relationship--this is not casual dating, but more like arranged marriage! And remember to discuss confidentiality at the opening of each meeting so that everyone is clear on the parameters. The moment you feel uneasy with the potential lawyer, stop revealing secrets.
Make sure an attorney is experienced in handling lottery winnings. While you may consider using a personal attorney to vet potential lottery attorneys, you also may want to strike out on your own and hire one attorney from the beginning. Not all attorneys have experience with lottery winners, so it's important to find one who has a proven track record of success in this area or in very large estates. Consider reviewing news stories leading up to the big win for potential experts: which attorneys did the state's major newspapers and tv stations interview leading up to the big draw? What about national news experts? Look up these attorneys and see whether their practice includes your state. If not, consider asking their offices for referrals inside your own state.
Get everything in writing. Once you've hired an attorney, make sure you get everything in writing, including their fees and the terms of their representation. Make sure that your accounting firm and trustees know the scope of the fees and what to expect when the bills start coming in to ensure that you are being billed honestly and fairly.
Using Trusts to Guard Your Purse
While you must claim the lottery as an individual, the Kansas lottery does provide a "group distribution form" to report names, addresses, social security numbers and signatures of members of a winning group, meaning distributions can be made to a trust or multiple trusts. The form also designates the percentage each recipient is taking from the prize. (The point of the form is so that Uncle Sam and the Kansas Department of Revenue get theirs.) You have only until December 31 of the year in which the prize was claimed to turn in this form, so it is important to have your trust ducks in a row when you decide to claim the prize!
Trusts can help you protect your winnings from creditors, lawsuits, and other risks. They can also help you manage your finances and ensure that your wishes are carried out after you die. If you take the annuity payout--and I recommend that you do--the lottery will continue paying out to your estate for the entire thirty years. Having a well constructed trust with a carefully crafted successor trustee provision and proactive beneficiary plans will ensure the prize lives on.
Here are some of the benefits of setting up a trust after winning the lottery:
Asset protection. A trust can help you protect your winnings from creditors, lawsuits, and other risks. Even if you choose to remain anonymous, the giant mansion you buy will tip a few people off! Consider that you and your money are now a target.
Financial management. A trust can help you manage your finances and ensure that your money is invested wisely. In fact, you can use multiple trustees and include financial controls to keep you from overspending.
Estate planning. A trust can help ensure that your wishes are carried out after you die. This can include ongoing distribution to loved ones and charities, as well as continuing management of any real estate or other property.
Summary
When you win the Big One, it is important to take steps to protect your winnings and your future. Hiring a personal attorney and/or a lottery or large estate attorney, then using trusts to receive the funds, are steps you can take to protect your wealth and ensure your financial security. If you're a Kansas resident and you win the jackpot, please feel welcome to reach out to me to discuss your legal options. While I have no direct experience with lottery winners, I am always ready to help a person plan for their future--even if that means helping locate and interview experts for the long haul.
This post was created with the assistance of Bard, an AI solution from Google.
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