The Powerball jackpot for Sept. 3 is up to $1.3 billion with a cash value of $589 million. If you win all that money, can you remain anonymous, or will everyone know you’re suddenly very wealthy?
Lottery anonymity
The answer heavily depends on what state you are in.
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“A lot of states have passed laws allowing anonymity to Powerball lottery winners,” David Walls, a lawyer who’s represented several lottery winners, told Straight Arrow News. “Some states have a modified system, and other states have no privacy laws at all with respect to winners.”
Eleven states will allow Powerball winners to remain anonymous with no issues, according to the Multi-State Lottery Association, which runs the Powerball lottery.
If you’re not in one of those states, you still have some options. The first option most winners turn to is setting up a trust or LLC to claim the winnings.
“The winner could be a limited liability company that I’ve created underneath the trust to own the ticket,” Kurt Panouses, a lawyer who’s represented dozens of lottery winners, told Straight Arrow News. “The limited liability company has a manager. The manager then creates this trust to claim the ticket. So that way we have layers of protection so that way the identity of the winners is not exposed.”
But some states require a “natural person” to claim the winnings, meaning a trust or LLC won’t suffice. Panouses said one way to deal with that is to create a group of people to claim the winnings with one person putting their name on it.
Think of it like an office pool that wins the lottery, with one person’s name attached legally.
“As long as you have a group of people, which is more than one, that’s a group, then you have the ability to have someone be the sacrificial lamb, essentially to be the authorized representative,” Panouses said. “They’re not going to sit there and identify all 50 people of the group.”
What to do if you win
“First step is don’t tell people about it,” Walls said.
Both lawyers agreed another first step to take is to put that ticket somewhere extremely safe. Specifically, a bank safe deposit box.
“Get it locked up in a bank where it’s protected,” Panouses said. “You don’t have to worry about fire, rain, whatever goes on. No hurricanes, no nothing, just it’s protected inside the bank safe deposit box. You’re not going to need the original ticket until the day of the claim.”
After you’ve kept your silence and protected that ticket, then it’s time to get your team together.
“Talk to an attorney as soon as you can about how you can go about in the state where you live, how you can go about maintaining your privacy and your anonymity,” Walls said.
An attorney is just one person you’re going to want to speak with.
“Your team really should consist of at least three different people,” Robert Pagliarini, a financial planner, told Straight Arrow News. “There should be a tax expert on hand, there should be a lawyer on hand, and you should also be working with a financial advisor.”
While you may lose half your winnings to taxes from the jump and think you’re done with the IRS, Walls said there’s a good chance you’re not.
“Oftentimes, the amount withheld at the beginning is not the correct amount number one,” Walls said. “And then number two, now you have a whole lot of money and that money, everything you do with it, is going to be taxed unless you carefully plan.”
Life-changing money
Winning a billion-dollar Powerball jackpot oftentimes doesn’t just change your life but the lives of the people around you, which is another reason it’s important to have experts by your side if you want to help family and friends.
“If the client makes a gift to them, they have an exemption amount of $14 million,” Panouses said. “After that 14 million, it’s a 40% transfer tax.”
Another piece of advice from Pagliarini goes back to limiting who you tell about your windfall.
“Don’t make any promises, because often what I find is people are super excited, they’ve got this money and they want to help their friends and their family and so they start making all these promises,” Pagliarini said. “And so at this point in the win, early on, you just really don’t know how much money you have.”
Part of determining how much money you have lies on whether you take the lump sum or annuity payments.
“It is the most significant financial decision someone who wins the lottery will ever make,” Pagliarini said.
Most winners take the lump sum.
“When you take a lump sum, if you start making bad decisions, there is no do over. There’s no ‘Get Out of Jail Free’ card,” Pagliarini said. “If you spend down your money or give it away, or make some bad investment decisions and you run out of money, that’s it. It’s game over. But if you take the annuity, it gives you an opportunity to each year when you get that deposit into your bank account, to basically have a reset and to do things differently.”
Do I sign the ticket?
The experts we spoke with had differing options on whether to immediately sign a winning ticket.
Lottery tickets are considered a bearer instrument. That means whoever has it in their possession owns it.
While signing it can help you keep claim of your ticket, there are other ways to do it.
“Take a selfie with the ticket right next to your face so you can read the numbers and then put the ticket in the safest place,” Panouses said.
Part of the argument against signing the ticket is the issue of remaining anonymous.
“I would prefer that winners consult with an attorney about anonymity, privacy, all of those kinds of things before they determine how they’re going to sign the ticket,” Walls said.
