Mississippi was one of the six states that did not have a state lottery or sell multi-state lottery games like Powerball and Mega Millions. However, last year, Mississippi legislators approved a bill that provided for the creation of a state lottery and possible participation in multi-state games.
Lottery jackpots have seen record highs in recent years. The world record high for a lottery jackpot occurred in 2016 when the Powerball jackpot reached almost $1.6 billion. Last year, the Mega Millions jackpot reached over $1.5 billion – the highest single-ticket winner.
Although the potential winnings for the lottery have substantially increased, the difficulty in landing a winning ticket has risen as well. The odds of winning a Powerball or Mega Millions jackpot are consistently around 1 in a few hundred million. For a statistical perspective, a person has a better chance of being struck by lightning, killed by a shark, or hit by a meteorite from space.
Dreaming about winning the lottery is a common experience these days. Fantasies about expensive properties, cars, and vacations may have floated around your head. But, have you day-dreamt about revocable trusts and other legal tools that can help you protect your winnings? In this blog, you’ll find the best advice you might never follow: tips on winning the lottery.
You may have heard many people scoff at this question, but it may not pay to follow their advice blindly. In general, the time value of money makes choosing a lump sum payment the most economically sound option. Additionally, because income taxes are incurred in the year you receive income, selecting a lump sum option allows you to calculate your taxes using an established tax rate.
However, if your winnings do not exceed $10 million, it may be better to spread your winnings out in annual payments. This could keep you out of the highest state and federal tax brackets. Furthermore, spreading out your winnings over time can protect most of your earnings from being depleted in a single spending frenzy.
Once you discover you are a lucky lottery winner, exercising restraint from acting right away can be difficult. However, it is in your best interests to establish a legal and financial strategy before claiming the prize. In Mississippi, a jackpot winner has up to 180 days from the drawing to claim their winnings. That should be more than enough time for you to plan and solidify a strategy for spending and protecting your newfound wealth.
Many horror stories surrounding impulsive jackpot winners support this approach. Some jackpot winners eventually go bankrupt, fall into legal trouble, and become targets for scammers, con artists, and sometimes violent criminals. This risk becomes a bigger concern in states that require winners to identify themselves.
An effective way for someone to protect their lottery winnings involves a standard tool that estate planners implement to protect their client’s estates: the revocable trust. A revocable trust is a legal arrangement whereby a person or entity is given the responsibility of administering assets on behalf of a beneficiary. Property and assets placed in the trust (trust property) are owned by the trust. The person in charge of administering those assets (trustee) has a legal obligation to abide by the trust’s terms and manage its assets for the benefit of the beneficiaries.
One of the first ways a revocable trust can help a lottery winner is by protecting their privacy. Once a trust is established, you can transfer ownership of the lottery ticket to the trust. When the time to claim your winnings arrives, the trust makes a claim – not you. Therefore, a trust can help
protect your identity if Mississippi law requires the jackpot winners to divulge their identities.
An experienced estate planner can help you create a series of trusts and corporate entities to ensure maximum privacy protection for when you claim your lottery winnings. Thus, only those people who are willing to sift through a long and confusing paper trail can find out who you are.
If you need to protect a substantial amount of wealth, you should consult the professional legal advice of an estate planning attorney in Jackson, Mississippi. At the Grant Legal Group PA, our estate planning lawyers can help you establish a comprehensive plan for protecting your assets, including lottery jackpot winnings. We take pride in our ability to deliver personalized legal advice and advocacy for our clients.
To learn more about how the Grant Legal Group PA can help protect your future and wealth, call us at (601) 664-0044 or contact us online for a consultation.