While the odds are against you if you play the lottery, you might get lucky and win the jackpot. But if you do, your first call shouldn’t be to friends or family to tell them of your good fortune. It should be to your lawyer.
Once you tell others of your winnings—or they learn about it in the newspaper or on television—they’ll congratulate you. But then, they’ll come to you looking for a handout. Long-lost friends will appear out of nowhere, likewise requesting assistance. Financial experts will contact you and offer their assistance in helping you invest your fortune. And of course, the taxman will want his share as well.
However, if you can keep your mouth shut, you can keep the entire matter private. Once you learn that you’ve won the lottery (or received a large inheritance, etc.), simply call your lawyer.
That’s what the winner of a recent US$144 million Powerball jackpot in Maryland did. Instead of accepting the funds directly, he set up a limited liability company (LLC) and named his lawyer as the LLC’s registered agent. Then, he sent the lawyer to collect the check.
Our anonymous Powerball winner will never see his in the headlines or on television. Neither will any legal or personal “parasites.” He’ll thus avoid the fate of past lottery winners such as William “Bud” Post, who won $16.2 million in the Pennsylvania lottery in 1988. Once word got out of Post’s good fortune, his former girlfriend sued him for a share of the winnings. She won the lawsuit. Next, Post’s brother hired a hit man to kill him, hoping to inherit the winnings, or at least part of them. Other family members harassed Post until he invested in their businesses. All of them failed, resulting in more financial losses.
Today, Post says, “”I wish it never happened. It was totally a nightmare.” He now lives on a social security check and food stamps.
Naturally, the unnamed Powerball winner should take other precautions to enjoy his fortune without falling victim to the common foibles of lottery winners. He might want to avoid casinos and drugs, for instance. Both have been the downfall of numerous lottery winners. And he should avoid conspicuous consumption—at least in his own name. If he wants to live in a new luxury home, fine—but his attorney should arrange to purchase it through an appropriate structure that doesn’t compromise his identity. Ditto for any luxury vehicles he might want to drive.
And if our winner is really smart, he’ll invest the bulk of the money outside the United States, where prospective litigants won’t be able to track it. He’ll probably set up an offshore trust to hold the assets privately. Of course, he’ll need to make a full accounting to the IRS of his offshore earnings.
Ultimately, if you find yourself the recipient of an unexpected windfall, take a deep breath before you do something stupid. Then, call a lawyer!
Copyright © 2009 by Mark Nestmann
(An earlier version of this post was published by The Sovereign Society.)