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 newfound monies. 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.
This wise winner will never see his in the headlines or on television. Neither will any legal or personal “parasites.”
In this manner, our anonymous Powerball winner will avoid the fate of past lottery winners such as William "Bud" Post, who won US$16.2 million in the Pennsylvania lottery in 1988. He now lives on a social security paycheck and food stamps.
Once word got out of Mr. Post’s good fortune, his former girlfriend sued him for a share of the winnings. She won the lawsuit. Next, his 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 pet businesses. All of them failed, resulting in more financial losses. Today, Post says, “"I wish it never happened. It was totally a nightmare."
Naturally, our anonymous Powerball winner will need to take other precautions to enjoy his newfound 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 if he’s smart, he’ll invest the bulk of the money outside the United States, where prospective litigants won’t be able to track it. (Of course, he’ll need to make a full accounting to the IRS of his offshore earnings.)
Our Powerball winner should avoid conspicuous consumption as well—at least in his own name. If he wants to live in a new luxury home, fine—but he should have his attorney make arrangements to purchase it through an appropriate structure that doesn’t compromise his identity. Ditto for any luxury vehicles he might want to drive.
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
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