People who suddenly inherit wealth and who do not know how to handle it, can face many difficulties. For lottery winners, sudden wealth can bring even more trouble.
One of the key principles in estate planning is this: it is not a good idea to leave heirs a great amount of wealth outright, especially if they are not already wealthy. People who do inherit wealth like that, tend to fall victim to many different traps.
They often waste the wealth on frivolous items. They gamble. They fall for the schemes of people who seek to manage the wealth for their own benefits. In estate planning, there are ways to avoid these traps, so heirs receive wealth and are protected from making possible mistakes.
For lottery winners, it is not that simple. They receive great wealth suddenly with zero planning. Not only do they face the same difficulties as heirs, but since their names are made public, many have been the victims of murder as Fox News reports in “The ‘curse’ of winning the lottery?”
Only two states allow lottery winners to receive their winnings anonymously by creating trusts. However, winners in other states are not completely without options.
Before a lottery winner collects her winnings or even tells anyone else about them, the person should see an estate planning attorney. The attorney can assist in making plans about how the wealth should be handled. For example, an attorney can create a trust with a professional trustee who can help guide the winner in how to manage her sudden wealth.
Reference: Fox News (Feb. 6, 2018) “The ‘curse’ of winning the lottery?”