If you are fortunate enough to win a large amount of money in a lottery, you will probably be paid thousands of dollars. Unfortunately, many individuals who strike it rich end up losing all of their jackpot due to poor money management, scammers or friends and relatives who seem to show up out of nowhere. Typically, this problem occurs when a winner is identified by the media or lottery commission.
Taking Advantage Of A Blind Trust
Fortunately, if you do win the lottery, you can take advantage of a blind trust to help you keep your winnings. A blind trust is a legal type of asset management structure that allows your identity to stay private.
When the winner of the 2010, $261.6 million Powerball Lottery jackpot went to claim their prize, they used an attorney so that they could stay anonymous. By using the lawyer as their trustee, they entered into a legal arrangement where the attorney became the trustee and they became the grantor and beneficiary. In this legal structure, they are allowed to keep their identity private.
Blind Trust Setup
In some states, if you are a lottery winner, you are not required to disclose your name. In those states, you don’t need to set up a blind trust if you win the lottery. These states include Ohio, North Dakota, Maryland, Kansas and Delaware.
If you live in any other state, some of those state lotteries advise winners to set up a blind trust. By encouraging winners to go this route, they are hoping that the winnings from the lottery don’t get spent in a haphazard manner.
When looking at the characteristics of a blind trust, it is basically a deed in which an agreement is made. The structure of a blind trust includes a beneficiary, trustee and trust grantor. Typically, with most blind trusts, a beneficiary does not have access to assets that are held by the trust. In the case of a person who wins a lottery, they can set this type of trust up so that they become the grantor as well as the beneficiary. An attorney acts as a trustee or administrator.
When a lottery ticket is cashed out, funds can be taken and anonymously donated to the trust. Full discretionary powers are given to the trustee — they manage the lottery winnings. This makes it important to retain a reputable attorney or trust management company that has experience and a long track record.
When a blind trust is set up for this purpose, lottery winners should know that the agreement cannot be changed. Once they choose a trustee to manage the funds, they will have to abide by this legal setup.