Other Tax Questions
Questions and comments on other topics covered in Fairmark.com, such as UTMA accounts, and any tax questions that don't fit our other categories.
Can unpaid lottery winnings (due to death) be willed to a trust before death occurs ?
Posted by: O2B_Free, April 26, 2010 12:06AM
If a powerball winner had elected a 20 year payout and died before collecting all the winnings I would like to ask the following questions:

Is there an advantage to having those unpaid winnings willed or otherwise directed to a trust?

If so is there a tax advantage to doing so?

tax implications
Posted by: jainen, April 26, 2010 01:07AM
>>is there a tax advantage<<

There are tax IMPLICATIONS to that. Whether those are advantages or not depends on the specific taxpayer's desires and circumstances. Discuss this with an estate planner.

Re: Can unpaid lottery winnings (due to death) be willed to a trust before death occurs ?
Posted by: rbotterb, May 1, 2010 02:55PM
The annuity payout options I've seen in these types of big pot gambling plans (Powerball, your local state Lotto, etc) tend to only be for the life of the winner. So willing the payout to another person isn't going to do much since once your gone, those payouts are gone too.

Roger

Re: Can unpaid lottery winnings (due to death) be willed to a trust before death occurs ?
Posted by: rbotterb, May 1, 2010 03:03PM
I see there is another posting where Powerball apparently allows for willing the payout to others on death, so at least on this one you have that option to keep up payments after death. I still recall at least with my state's lotto some provision I read before that the payout was for the life of the winner only, though maybe that has changed over time.

Another point you may need to consider before taking the payout as an annuity is that the annuity contract is generally sold off to other financial firms (I would imagine most would be insurance companies), and the bigger question nowadays will be will they be around 20+ years to pay off that annuity or not. If they go belly up, your annuity may be picked up by another firm as the Govt steps into transfer contracts to another firm if the one(s) paying your that annuity go under, but depending on your state laws, you may find that not all of your annuity is guarenteed.

Roger



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