About trusts and all the nitty gritty after winningPrev TopicNext Topic

• WinWinChicDin

  

  United States
  Member #173,487
  March 5, 2016
  148 Posts
  Offline
  Jul 22, 2016, 7:42 pm

  ▲▼

  Does anyone on LP work in the financial and/or legal arena with knowledge on trusts

  After the big win, the general consensus is put your winnings in a trust of your choosing....If the money is not growing through investments, my understanding is that you will not be taxed again. (correct me if i am wrong)

  My curiosity lies in the money that is dispersed from the trust to you thereafter. My little reading online and on the IRS website deems that this is now classified as income, and is liable to be taxed as every other form of income.

   

  Is this pretty much what either one of us will deal with after we win () ....a second tax on your money? Or am I missing something.
• Rexer90

  

  LA Ca.
  United States
  Member #172,741
  February 3, 2016
  203 Posts
  Offline
  Jul 22, 2016, 11:50 pm

  ▲▼

  Depends if the  $$ was taxed as income before it went into the trust. If you had already paid income tax on  the (principal)  money then you'd only pay taxes on the dividends & interest earned, not the original lump sum. That only gets taxed once as income.

   

   This kinda explains it:

   

  http://www.investopedia.com/ask/answers/101915/do-beneficiaries-trust-pay-taxes.asp
• pepperjack

  United States
  Member #166,741
  June 6, 2015
  17 Posts
  Offline
  Jul 23, 2016, 2:03 pm

  ▲▼

  Tax issues aside, Does a trust offer protection of money being "untouchable" if the winner is sued? And can the trust be set up where money is released as requested by the trustees, not knowing in advance when they would want money to be released?
• Rexer90

  

  LA Ca.
  United States
  Member #172,741
  February 3, 2016
  203 Posts
  Offline
  Jul 23, 2016, 2:19 pm

  ▲▼
  In response to pepperjack

  Quote: Originally posted by pepperjack on Jul 23, 2016

  Tax issues aside, Does a trust offer protection of money being "untouchable" if the winner is sued? And can the trust be set up where money is released as requested by the trustees, not knowing in advance when they would want money to be released?

  I think it would depend on what you may get sued for. For instance, if the trust (with you as trustee) effectively owns the vehicles you drive & you get in a wreck, then the trust may be on the hook. But..... if you personally own the vehicles that you drive, then the trust isn't involved, even if you bought them with money you received from the trust. Ditto with homes or businesses.
• grwurston

  

  100

  Same digits. Different games.

  United States
  Member #90,245
  April 24, 2010
  16,873 Posts
  Offline
  Jul 23, 2016, 4:50 pm

  ▲▼
  In response to Rexer90

  Quote: Originally posted by Rexer90 on Jul 22, 2016

  Depends if the  $$ was taxed as income before it went into the trust. If you had already paid income tax on  the (principal)  money then you'd only pay taxes on the dividends & interest earned, not the original lump sum. That only gets taxed once as income.

   

   This kinda explains it:

   

  http://www.investopedia.com/ask/answers/101915/do-beneficiaries-trust-pay-taxes.asp

  Good info there. Thanks Rexer90.

  

  When playing the lottery the thing that should matter the most is: Are you winning more than you spend? 
• PrisonerSix

  

  Baton Rouge, LA
  United States
  Member #4,602
  May 7, 2004
  1,396 Posts
  Offline
  Jul 24, 2016, 1:56 pm

  ▲▼
  In response to Rexer90

  Quote: Originally posted by Rexer90 on Jul 23, 2016

  I think it would depend on what you may get sued for. For instance, if the trust (with you as trustee) effectively owns the vehicles you drive & you get in a wreck, then the trust may be on the hook. But..... if you personally own the vehicles that you drive, then the trust isn't involved, even if you bought them with money you received from the trust. Ditto with homes or businesses.

  Not sure about liability, but one thing trusts can do is make it hard to find your assets and if you're not seen as someone with deep pockets, someone out for money may not want to bother with you. If you're in an auto accident or something happens on your property, have a good amount of liability insurance to cover it.
  
  This subject I think overlaps on another thread in this forum, "Strategy for Remaining Anonymous," which is here:
  
  https://www.lotterypost.com/thread/304797

  Prisoner Six
  
  "I am not a number, I am a free man!"
• TheMeatman2005

  

  Brooklyn, NY
  United States
  Member #169,714
  October 29, 2015
  1,704 Posts
  Offline
  Jul 24, 2016, 4:05 pm

  ▲▼

  These questions will all be answered by the professional financial adviser, lawyer and all the other sucks you get in a row when winning.

  Win it first, then get all your questions answered before claiming the jackpot.

  The Meatman 🥩🍗🍔🍖🍤🌭

  “The quickest way to double your money is to fold it in half and put it in your back pocket.” Will Rogers

  Winning happens in a flash, Like A Bolt Of Lightning! 
• WinWinChicDin

  

  United States
  Member #173,487
  March 5, 2016
  148 Posts
  Offline
  Jul 24, 2016, 4:11 pm

  ▲▼
  In response to TheMeatman2005

  Quote: Originally posted by TheMeatman2005 on Jul 24, 2016

  These questions will all be answered by the professional financial adviser, lawyer and all the other sucks you get in a row when winning.

  Win it first, then get all your questions answered before claiming the jackpot.

  Very very very true...

  But, it is always best going into such situations with a skeleton of what you want and then the professionals can fill in the rest. Professionals are not all equal in their intent (TN winners come to mind)

  Educate yourself, as much as you can. Even if you never win...but if you do, in all the excitement you know what questions to ask first or at least give them an idea of what you envisioned for yourself and your new found wealth.
• TheMeatman2005

  

  Brooklyn, NY
  United States
  Member #169,714
  October 29, 2015
  1,704 Posts
  Offline
  Jul 24, 2016, 5:16 pm

  ▲▼

  I just read a very interesting article on the subject of this post.

  Something for every prospective winner

  https://www.nerdwallet.com/blog/investing/dear-powerball-winner-make-no-sudden-moves-until-you-read-this/

  The Meatman 🥩🍗🍔🍖🍤🌭

  “The quickest way to double your money is to fold it in half and put it in your back pocket.” Will Rogers

  Winning happens in a flash, Like A Bolt Of Lightning! 
• ArizonaDream

  

  United States
  Member #169,267
  October 10, 2015
  629 Posts
  Offline
  Jul 24, 2016, 5:37 pm

  ▲▼
  In response to TheMeatman2005

  Quote: Originally posted by TheMeatman2005 on Jul 24, 2016

  I just read a very interesting article on the subject of this post.

  Something for every prospective winner

  https://www.nerdwallet.com/blog/investing/dear-powerball-winner-make-no-sudden-moves-until-you-read-this/

  Thanks for the link. That site has some pretty good articles for those of us that haven't (yet) won a jackpot too.
• TheMeatman2005

  

  Brooklyn, NY
  United States
  Member #169,714
  October 29, 2015
  1,704 Posts
  Offline
  Jul 24, 2016, 5:44 pm

  ▲▼
  In response to ArizonaDream

  Quote: Originally posted by ArizonaDream on Jul 24, 2016

  Thanks for the link. That site has some pretty good articles for those of us that haven't (yet) won a jackpot too.

  I thought so too.

  Hopefully these ideas will come in handy for one of us....one day soon (like this Wednesday )

  The Meatman 🥩🍗🍔🍖🍤🌭

  “The quickest way to double your money is to fold it in half and put it in your back pocket.” Will Rogers

  Winning happens in a flash, Like A Bolt Of Lightning!