Steps to Take After Winning the Lottery

Transcript

Hi, I’m Mark Harder, an ACTEC Fellow in Holland, Michigan. With me today is Marshall Peterson, who is an ACTEC Fellow from Knoxville, Tennessee. We’re here to talk about the steps to take after winning the lottery. Each of us has had the experience of representing winners of lottery jackpots measured in the hundreds of millions of dollars. We want to speak today on what a winner of a large lottery prize should do if they have the good fortune to win a large jackpot.

Claiming a Lottery Ticket

Marshall, one of the first things a lottery winner will want to know is, what should I do about claiming a jackpot?

Marshall Peterson: That is the first thing people want to know, and if you’re the holder of a winning ticket, there’s a number of things you should do immediately:

• First, verify that it really is a winning ticket by checking the lottery website and comparing it to the numbers on your ticket.
• Secondly, endorse the ticket and make copies for yourself and your attorney if you are using one.
• Secure the physical ticket, ideally in a safe deposit box, because remember, this is now a live document.
• If you’re claiming the ticket with the assistance of a lawyer, have the lawyer communicate with the lottery without disclosing your name, understand the claims process, and confirm the number of days that are available to collect.
• Request and review all paperwork in advance of any claims meeting with lottery officials, so there are no surprises when you show up to collect.
• Most lotteries offer a choice of an annuity stream or a lump sum. Determine what form the prize will take, and for this you probably want to consult with a CPA.
• If the lottery will require attendance at a press conference, retain a communications firm to prepare you for the media event and the attention. The communications firm can also review and help write the press release which the lottery will issue, and prepare a statement on your behalf for media inquiries.
• And, especially if the broadcast is on statewide TV, which it was in our instance, arrange security to and from the claiming venue, and arrange for ongoing security for family.

Preserving Privacy and Anonymity After Winning the Lottery

Mark, I understand your clients did not wish to be identified. What were some of the steps you took to preserve their anonymity and protect them?

Mark Harder: Sure, you’re right, my clients have not wanted to be identified.

The first and most important thing, which might be the hardest, is be discreet. One of my partners once told me, every person who’s told a secret thinks they get one tell. Don’t tell your coworkers, friends, or neighbors, as hard as that may be. Consider not telling your extended family even, especially if they’re inclined to talk. Stay off social media. The bottom line is, be very careful who knows, and make sure your children understand this too.

In the case of my clients, we were able to form a lottery club and appoint a club representative to appear at the media event on behalf of the holders of the ticket. This shielded them from public view. In addition, we had retained a communications firm who helped the winners scrub their social media profiles and to make their online profile less public, which could be important if their identities ever do become known.

Also, use confidentiality agreements with third parties such as real estate brokers and others who come in contact with you and learn of your wealth.

Winners, especially those whose identity is public, should have a home security system installed, and they might want to consider getting new cell phone numbers and new email addresses and share those numbers and addresses with only a limited number of persons.

Philanthropy With Lottery Winnings

Marshall, my clients wanted to give back to some causes near to their hearts and are already in the process of doing so. Your clients were philanthropic as well. Can you briefly describe what your clients did to share their good fortune with a larger community?

Marshall Peterson: Yes, my client is a former actor who loves live theater. He created a foundation to support community-based theater all across the United States, especially theatrical productions of less well-known shows and shows with large casts that are not performed often due to the higher costs associated with such large casts. This also helps the actors involved qualify sooner for their equity cards and exposes the communities in which the theaters exist to world-class theater.

He’s actively supported a number of productions over the past ten years, including one that was nominated for a Tony Award a few years ago.

Hire Professional Advisors

Mark, we know individuals with significant wealth typically have a team of advisors helping them. Did your clients assemble such a team?

Mark Harder: Yes, they did. They have assembled a team to support them. Besides our law firm, which is providing a variety of different legal services, the clients also rely on a CPA firm for tax compliance and tax planning and an investment advisor and wealth strategist. A professional trustee will also be a part of the family’s team of advisors as well. Individuals setting up a foundation may want to hire a consultant to define the mission, the foundation’s mission, and manage the foundation. Finally, in our case, a communications firm was also extremely helpful in the first couple of months as we claimed the lottery prize.

Making sure all of the members of the team know each other and work well together is extremely important to helping the winners adjust to their new circumstances and preserve their wealth for a long period of time.

Other Advice for Lottery Winners

Marshall, do you have any other advice for a lottery winner?

Marshall Peterson: Well, make sure the client has an up-to-date estate plan in place that is adequate and appropriate for the changed circumstances.

Make sure you retain estate planning counsel who has experience advising clients with similar and large levels of wealth. The universe of lawyers who have experience representing clients with large amounts of wealth, such as wealth in excess of $25 million, is pretty small.

ACTEC Fellows often are good choices or can recommend someone with suitable experience.

Thanks for watching. Visit actec.org/estate-planning for more resources.