How To Remain Anonymous If You Win The $1.5 Billion Powerball Lottery
If you think the odds of winning this week’s record breaking $1.5 billion Powerball lottery were low (1 in 292 million), try remaining anonymous if you win! The Multi-State Lottery Association, which runs the Powerball Lottery, explicitly states that there are only five states in which you have the legal right to remain anonymous. If you don’t buy the winning ticket in one of those states, are you out of luck? Not necessarily. Here is an excerpt from my new book, The Sudden Wealth Solution: 12 Principles to Transform Sudden Wealth Into Lasting Wealth.
Gallery: 10 Steps To Take When You Win A Lottery Jackpot
If you want to remain anonymous but didn’t purchase the winning ticket in one of those states, it makes the job harder, but there are strategies and legal entities you can create that will help you remain more private if you win the lottery. There are two different strategies. The first is using a “blind” trust.
Remaining Anonymous After Winning the Lottery: Using a Blind Trust
There are a lot of misconceptions and potential problems with blind trusts. Federal officeholders, such as senators or governors, are required to either fully disclose all their financial holdings and any possible conflicts of interest, or place their holdings in a blind trust with a financial institution as the trustee. To prevent the perception that they are voting on legislation from which they could personally benefit, their assets are managed independently and by a third party, without their knowledge or control (i.e., the politician is blind to their investments). But you’re not a politician and you don’t want to give up control of your assets to someone else.
Recently, the term blind trust has grown to include a trust or entity that attempts to hide the true ownership from the public and asset searches. In this case, “blind” refers not to the owner of the trust but to everyone else.
Here you create an entity, a trust or LLC, and name it something other than your name. For example, one of my actor clients titled his trust using an obscure quote from a former president of the United States. Unlike a politician’s blind trust, he has 100% control of the trust, assets, and decisions. This doesn’t completely cloak the account, but it can make tying the trust to my client more difficult in an asset search. For example, Louise White, the winner of a $210 million lottery, named her trust the “Rainbow Sherbert Trust” after the ice cream flavor that led her to the grocery store where she purchased the winning ticket.
Remaining Anonymous After Winning the Lottery: Using a Trust Within a Trust
For high profile lottery winners who want even greater anonymity, a trust within a trust structure is recommended. This is an advanced strategy that should only be taken with competent and experienced legal counsel.
One of my sudden wealth colleagues, Jason Kurland, is a “lottery lawyer” and partner at Certilman, Balin, Adler, & Hyman, LLP. Jason has represented several of the largest Powerball jackpot winners and specializes in protecting the anonymity of lottery winners. Jason is an advocate of the trust within a trust structure because it not only shields winners from requests for money, but also protects them from others.
The trust within a trust requires two trusts:
First Use a Claiming Trust
It’s called the Claiming Trust because this is the entity that claims the prize. As the winner, you assign the ticket to the trust. The trust, which now holds the winning ticket, can claim the prize. The Claiming Trust is a short-term trust that simply claims the prize and then distributes the win to the Bridge Trust. To keep your win as private as possible, the Claiming Trust should have a unique title not at all related or traceable to you. For example, you wouldn’t want the trust to have your name, address, or other identifiable information as the title.
Handing over ownership of a million dollar winning ticket to a trust that is not in your name can seem reckless and scary. Why is this strategy recommended? Rest assured, even though the name of the Claiming Trust won’t have your name, the trust will be directly tied to you. The Claiming Trust, like most trusts, include three types of people: (1) grantor – this is you, the creator of the trust and the individual whose assets are put into the trust, (2) trustee – this is also you, the person who manages the trust and makes decisions regarding investments and distributions and (3) beneficiary – again, also you, the person for whom the trust was created and who receives the benefits of the trust.
The astute reader may be wondering how anonymous the Claiming Trust is when your name is listed as grantor, trustee, and beneficiary throughout the trust document. It’s possible to create an irrevocable trust and name a trusted family member, attorney, or financial advisor as trustee whose only function is to immediately transfer the trust assets into the Bridge Trust for which you will have control. For the winner who wants to remain as private as possible, this is a potential strategy, but for most, I don’t recommend giving up control.
Although most revocable trusts use the Social Security Number of the grantor (i.e., you – the person setting up the trust), you want to avoid this. Why? State lottery commissions are state agencies, and as such, all of their records are subject to the Freedom of Information Act, which makes it easy for a reporter (or anyone else!) to request these documents and trace the Social Security Number back to you. For greater anonymity, depending on the state lottery commission’s rules, you may be able to have a limited liability company (LLC) act as the grantor.
Using this strategy, the winning lottery ticket would be owned by the LLC and the LLC would be the grantor of the Claiming Trust. If a nosy reporter gets a hold of the Claiming Trust, they wouldn’t see your name but would see the name of the LLC instead. However, some states have reporting requirements when forming an LLC that would identify the name of the person who owns the LLC. For example, in California, a Statement of Information for domestic and foreign corporations must be filed within 90 days of forming the LLC, which requires the complete name and addresses of its managers and officers. This is where it is important to work with an attorney well versed in the laws of your state.
Second Use a Bridge Trust
The lottery proceeds are paid into the Claiming Trust and then almost immediately transferred into the Bridge Trust. The reason the lottery proceeds aren’t simply paid to the Bridge Trust is because the Claiming Trust helps to shield the true identity of the winner – it is cloaked to avoid determining the true owner. The Bridge Trust, however, is not designed to protect the identity of the winner. The details of this trust are not subject to Freedom of Information Act requests, so your name can be listed as grantor and trustee, but because the trust name will be listed as beneficiary of the Claiming Trust, which is subject to Freedom of Information Act requests, it’s best not to name the Bridge Trust with personally identifiable information.
It’s called a “bridge” trust because this is the vehicle that holds and manages the assets for you while you determine if there needs to be more complex estate, charitable, and asset protection trusts/entities. But if you do not need more complex planning, the Bridge Trust is perfectly sufficient as your “living trust” and to serve as your main estate planning document, because unlike the Claiming Trust, it will have all of the necessary estate planning provisions.
Connect with me on Twitter @rpagliarini, my financial planning blog, or email me. This discussion is not intended as financial, legal or tax advice, and cannot be relied upon for any purpose without the services of a qualified professional.Here are several tips on how you can remain anonymous if you just won this week’s $1.5 billion Powerball lottery.
She Won The $560 Million Powerball — And Immediately Regretted This
(Photo by Allen J. Schaben/Los Angeles Times via Getty Images)
When this New Hampshire woman won the $560 million Powerball jackpot in January, she did what most people would do. She signed the back of her ticket.
But it almost cost her more than she bargained for.
Here’s what you need to know and what you should do if you’re fortunate enough to follow in her footsteps and win the lottery.
Step #1: Remain anonymous
If you win the lottery, your best bet is to remain anonymous.
With your newfound fortune, the last thing you want is to draw attention to your newfound fortune. Jane Doe (the Powerball winner whose name has not been disclosed) realized after she signed her winning lottery ticket that she wished to remain anonymous.
Typically, the choice to remain anonymous after you win the lottery may not be yours.
The rules regarding anonymity vary by state, with some states requiring all lottery winners to disclose their identity. Why?
Some lottery officials say they want transparency and to ensure that the winner is not related to a lottery official. Therefore, lottery commissions strive for transparency, and typically want winners to disclose their name, city and prize amount.
Remaining anonymous when you win the lottery can only be done in six U.S. states: Delaware, Kansas, Maryland, North Dakota, Ohio and South Carolina. The remaining states where Powerball is sold, including Washington, D.C., Puerto Rico and the U.S. Virgin Islands, require that winners publicly disclose their identity.
In New Hampshire, a lottery winner’s name, town and prize amount are publicly disclosed as part of the state’s “Right To Know” law.
However, Doe asked a state judge to grant her anonymity even though she signed her name on the back of the ticket and lives in a state that does not permit anonymity for lottery winners.
On Monday, Judge Charles Temple granted her request – to the objection of New Hampshire lottery officials who argued that revealing her identity increases transparency and trust in the lottery system in accordance with state rules. The judge ruled that revealing her name would constitute an invasion of privacy since lottery winners can face – according to Temple’s order – “repeated solicitation, harassment, and even violence.” The judge ruled, however, the winner had to reveal her town (Merrimack).
Step #2: Sign the winning lottery ticket
So, if you win the lottery and live in a state that does not guarantee anonymity, should you still sign the back of the ticket?
It may sound outdated, but you should always sign the back of a winning lottery ticket.
A lottery ticket is considered a bearer instrument, which means that whoever signs the ticket can claim the lottery winnings.
Therefore, if you lose an unsigned winning ticket, the person who find it legally can claim the prize.
The question then is what name do you sign on the back of the ticket – particularly if you want to remain anonymous.
You can accept a lottery prize through legal structures such as a blind trust that can protect your identity. In this case, the winner created the Good Karma Family 2018 Nominee Trust. Her lawyer, William Shaheen, accepted the lump sum prize of $352 million (approximately $264 million after taxes) on her behalf.
What’s the first thing she did with her new fortune? She donated almost $250,000 to charity – and has plans to donate up to $50 million. Way to make lemonade.If you win the lottery, make sure to do this one thing. ]]>