How To Remain Anonymous If You Win The $1.5 Billion Powerball Lottery
If you think the odds of winning this week’s record breaking $1.5 billion Powerball lottery were low (1 in 292 million), try remaining anonymous if you win! The Multi-State Lottery Association, which runs the Powerball Lottery, explicitly states that there are only five states in which you have the legal right to remain anonymous. If you don’t buy the winning ticket in one of those states, are you out of luck? Not necessarily. Here is an excerpt from my new book, The Sudden Wealth Solution: 12 Principles to Transform Sudden Wealth Into Lasting Wealth.
Gallery: 10 Steps To Take When You Win A Lottery Jackpot
If you want to remain anonymous but didn’t purchase the winning ticket in one of those states, it makes the job harder, but there are strategies and legal entities you can create that will help you remain more private if you win the lottery. There are two different strategies. The first is using a “blind” trust.
Remaining Anonymous After Winning the Lottery: Using a Blind Trust
There are a lot of misconceptions and potential problems with blind trusts. Federal officeholders, such as senators or governors, are required to either fully disclose all their financial holdings and any possible conflicts of interest, or place their holdings in a blind trust with a financial institution as the trustee. To prevent the perception that they are voting on legislation from which they could personally benefit, their assets are managed independently and by a third party, without their knowledge or control (i.e., the politician is blind to their investments). But you’re not a politician and you don’t want to give up control of your assets to someone else.
Recently, the term blind trust has grown to include a trust or entity that attempts to hide the true ownership from the public and asset searches. In this case, “blind” refers not to the owner of the trust but to everyone else.
Here you create an entity, a trust or LLC, and name it something other than your name. For example, one of my actor clients titled his trust using an obscure quote from a former president of the United States. Unlike a politician’s blind trust, he has 100% control of the trust, assets, and decisions. This doesn’t completely cloak the account, but it can make tying the trust to my client more difficult in an asset search. For example, Louise White, the winner of a $210 million lottery, named her trust the “Rainbow Sherbert Trust” after the ice cream flavor that led her to the grocery store where she purchased the winning ticket.
Remaining Anonymous After Winning the Lottery: Using a Trust Within a Trust
For high profile lottery winners who want even greater anonymity, a trust within a trust structure is recommended. This is an advanced strategy that should only be taken with competent and experienced legal counsel.
One of my sudden wealth colleagues, Jason Kurland, is a “lottery lawyer” and partner at Certilman, Balin, Adler, & Hyman, LLP. Jason has represented several of the largest Powerball jackpot winners and specializes in protecting the anonymity of lottery winners. Jason is an advocate of the trust within a trust structure because it not only shields winners from requests for money, but also protects them from others.
The trust within a trust requires two trusts:
First Use a Claiming Trust
It’s called the Claiming Trust because this is the entity that claims the prize. As the winner, you assign the ticket to the trust. The trust, which now holds the winning ticket, can claim the prize. The Claiming Trust is a short-term trust that simply claims the prize and then distributes the win to the Bridge Trust. To keep your win as private as possible, the Claiming Trust should have a unique title not at all related or traceable to you. For example, you wouldn’t want the trust to have your name, address, or other identifiable information as the title.
Handing over ownership of a million dollar winning ticket to a trust that is not in your name can seem reckless and scary. Why is this strategy recommended? Rest assured, even though the name of the Claiming Trust won’t have your name, the trust will be directly tied to you. The Claiming Trust, like most trusts, include three types of people: (1) grantor – this is you, the creator of the trust and the individual whose assets are put into the trust, (2) trustee – this is also you, the person who manages the trust and makes decisions regarding investments and distributions and (3) beneficiary – again, also you, the person for whom the trust was created and who receives the benefits of the trust.
The astute reader may be wondering how anonymous the Claiming Trust is when your name is listed as grantor, trustee, and beneficiary throughout the trust document. It’s possible to create an irrevocable trust and name a trusted family member, attorney, or financial advisor as trustee whose only function is to immediately transfer the trust assets into the Bridge Trust for which you will have control. For the winner who wants to remain as private as possible, this is a potential strategy, but for most, I don’t recommend giving up control.
Although most revocable trusts use the Social Security Number of the grantor (i.e., you – the person setting up the trust), you want to avoid this. Why? State lottery commissions are state agencies, and as such, all of their records are subject to the Freedom of Information Act, which makes it easy for a reporter (or anyone else!) to request these documents and trace the Social Security Number back to you. For greater anonymity, depending on the state lottery commission’s rules, you may be able to have a limited liability company (LLC) act as the grantor.
Using this strategy, the winning lottery ticket would be owned by the LLC and the LLC would be the grantor of the Claiming Trust. If a nosy reporter gets a hold of the Claiming Trust, they wouldn’t see your name but would see the name of the LLC instead. However, some states have reporting requirements when forming an LLC that would identify the name of the person who owns the LLC. For example, in California, a Statement of Information for domestic and foreign corporations must be filed within 90 days of forming the LLC, which requires the complete name and addresses of its managers and officers. This is where it is important to work with an attorney well versed in the laws of your state.
Second Use a Bridge Trust
The lottery proceeds are paid into the Claiming Trust and then almost immediately transferred into the Bridge Trust. The reason the lottery proceeds aren’t simply paid to the Bridge Trust is because the Claiming Trust helps to shield the true identity of the winner – it is cloaked to avoid determining the true owner. The Bridge Trust, however, is not designed to protect the identity of the winner. The details of this trust are not subject to Freedom of Information Act requests, so your name can be listed as grantor and trustee, but because the trust name will be listed as beneficiary of the Claiming Trust, which is subject to Freedom of Information Act requests, it’s best not to name the Bridge Trust with personally identifiable information.
It’s called a “bridge” trust because this is the vehicle that holds and manages the assets for you while you determine if there needs to be more complex estate, charitable, and asset protection trusts/entities. But if you do not need more complex planning, the Bridge Trust is perfectly sufficient as your “living trust” and to serve as your main estate planning document, because unlike the Claiming Trust, it will have all of the necessary estate planning provisions.
Connect with me on Twitter @rpagliarini, my financial planning blog, or email me. This discussion is not intended as financial, legal or tax advice, and cannot be relied upon for any purpose without the services of a qualified professional.
I have dedicated my professional life to learning and writing about retirement planning and managing sudden wealth. I have a PhD in financial and retirement planning andHere are several tips on how you can remain anonymous if you just won this week’s $1.5 billion Powerball lottery.
California Powerball winner: Why he’s keeping a low profile
California Powerball winner B. Raymond Buxton waited more than a month to claim the $425 million prize. But the California Powerball winner continues to keep a low profile. Why that might be a smart move.
- By Channing Joseph Associated Press
The winner of one of the largest Powerball jackpots in history has finally come forward — but he still hasn’t quite revealed his identity.
B. Raymond Buxton, a Northern California man, waited more than a month to accept his prize on Tuesday at the California Lottery headquarters in Sacramento.
In a photo taken after he claimed the money on Tuesday, Buxton was covering his face with an oversize check for $425 million. Perhaps the only clue to his identity was his unusual shirt, which featured a picture of the Star Wars character Yoda and read, “Luck of the Jedi I have.”
“He really wants to live a private life as best he can,” Buxton’s publicist Sam Singer told The Associated Press. “He was a solidly middle-class American, and today he is a solidly wealthy one.”
Buxton is hoping to remain out of the limelight and doesn’t want to speak directly to the media, Singer said. He also won’t reveal his age, address or what he did for a living until his very recent retirement.
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One reason that Buxton waited to come forward on April 1 — April Fool’s Day — is simply that he has a healthy sense of humor, Singer said. “He still can’t believe it’s not a prank on him. But the reality is Ray Buxton is the winner.”
Another reason is that Buxton has been working since February with an attorney and financial adviser to establish new bank accounts, set up a charity and sort out tax issues.
“I’m going to enjoy my new job setting up a charitable foundation focused on the areas of pediatric health, child hunger and education,” Buxton said Tuesday in a prepared statement.
In some states, lottery winners can choose to remain anonymous. Last September, for example, a South Carolina resident won $399 million but kept his or her identity secret. Some states require the winner to go public, in order to publicize the lottery and to insure transparency and trust in the system. But winning the lottery can cause so many problems that some states are pushing legislation to allow winners to remain out of the limelight, reports The Christian Science Monitor.
Lawmakers in both Michigan and New Jersey have unsuccessfully proposed laws to protect the privacy of winners who, they argue, are “prone to falling victim to scams, shady businesses, greedy distant family members and violent criminals looking to shake them down,” an AP story said.
The National Endowment for Financial Education cautions those who receive a financial windfall – whether from lottery winnings, divorce settlements, cashed-out stock options, or family inheritances – to plan for their psychological needs as well as their financial strategies. The Denver-based nonprofit estimates that as many as 70 percent of people who land sudden windfalls lose that money within several years.
Buxton bought the sole winning ticket for the Feb. 19 drawing at the Dixon Landing Chevron station in the San Francisco Bay Area city of Milpitas, about 10 miles north of San Jose.
Buxton was getting lunch at a Subway restaurant inside the station when he decided to buy another ticket because the jackpot was so large, lottery officials said.
After the winning numbers were announced, Buxton said, he sat in front of his computer in disbelief, checking and rechecking his ticket — and telling no one else that he had won. “Sitting on a ticket of this value was very scary,” he said.
“Once the initial shock passed, I couldn’t sleep for days,” Buxton said in the statement on Tuesday.
The $425 million jackpot is one of the largest lottery jackpots in U.S. history, though far from the record. The nation’s biggest lottery prize was a Mega Millions jackpot of $656 million in 2012. The biggest Powerball jackpot was a $590.5 million in May.
The Feb. 19 jackpot was the largest jackpot in California history, according to lottery officials, and the sixth-largest ever won in the United States.
The odds of matching all six Powerball numbers are 1 in about 175 million, according to statistics from the Multi-State Lottery Association in Iowa.
Powerball is played in 43 states, Washington, D.C., and the U.S. Virgin Islands.
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Associated Press writer Sudhin Thanawala contributed reporting from San Francisco.
Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.California Powerball winner B. Raymond Buxton waited more than a month to claim the $425 million prize. But the California Powerball winner continues to keep a low profile. Why that might be a smart move. ]]>