Important options to consider if you win the lottery

The winner chose to remain anonymous under HB 59, which allows winners of certain lottery prizes of $1 million or more to remain anonymous.

Our recommendations:

Speak with a qualified estate planning attorney before collecting your winnings. The following estate planning options can help reduce taxes, keep gains private, and protect your assets:

Create a trust

Taxes: The credit can hold the gains to reduce taxes.

Privacy after death: If you’re also concerned about keeping your earnings and assets private, creating a revocable trust can help with privacy when you die. If you had a will upon your death, the will goes through the probate process and is made public. However, using a revocable trust will fully preserve your assets and beneficiaries.

Community property, separate property and divorce

Texas is a community property state. This means that anything purchased with marital money or acquired during the marriage is considered joint property. This includes lottery winnings. If a lottery winner gets a divorce later, the winnings will likely be split between the spouses. Speak with an attorney before collecting your earnings to discuss your options.

Making annual gifts

To reduce the amount of taxes paid on winnings, you have the option of gifting money to family and friends. The annual gift tax exclusion amount for 2020 is $15,000. This means that you can give up to $15,000 annually to a tax-exempt person or charitable organization. This will be useful if you plan to leave a lump sum of money for family members or a friend upon your death. To help reduce taxes, you have the option to give it to them now.

Receive a lump sum or annual payment

When winning the lottery, you have the option of choosing how to collect the winnings by either receiving the lump sum in one go or having a series of payments over an extended period of time. If you choose to charge the lump sum, you can take advantage of HB 59 and remain anonymous. However, if you choose to receive premium payments, your information will become public within 30 days after the winnings are claimed.

There are many options to consider if you are the lucky winner. Remember to consult with a qualified estate planning attorney and don’t forget to party!

Need help from an estate planning attorney in Dallas, Texas?

Call our office at 214-559-7202 or contact us online to schedule a free consultation today.

Read more Frequently asked questions and learn more about anonymizing a lottery winner.

Source link