Lotteries have become enormously popular in the United States. There is a widespread perception that many lottery winners burn through their newfound wealth rather quickly and don’t end up better off in the long run.
What would you do if you suddenly came into a lot of money? Such as, for example, winning a $144 million Powerball jackpot. That was the question faced by a long-time Washington, D.C., resident who bought a single $1 lottery ticket with randomly selected numbers.
An early decision was to take the lump sum, not the annuity, perhaps because he was 82 years old. That reduced the jackpot to $79.6 million. The man’s attorney estimates that the sum will be reduced further by income taxes to $60 million.
Still, that’s a lot of money and a lot of responsibility. This individual decided that he wanted to remain anonymous. He hired an attorney and created a limited liability company to receive the proceeds, which then will pass to three trusts. One trust will provide for the education of the man’s ten children and 47 grandchildren. A second trust will meet their health care expenses. The third and final trust is for charitable giving.
Lottery officials were reportedly very disappointed that they could not present the big check to the big winner. On the back of the lottery ticket is fine print that asserts the owner of the winning ticket grants the lottery the right to use a photograph, together with the winner’s name and residence, for publicity purposes. Creating an entity to receive the proceeds is a legal way to circumvent this requirement.
Why would someone with sudden wealth want to preserve anonymity? Because he wanted to maintain a normal life. The winner’s lawyer said his office received 80 telephone calls just the first morning after it was revealed that his client had won the jackpot. Most were solicitations, requests for charitable gifts. One would have to take the telephone off the hook and perhaps get an unlisted number to avoid such an assault.
So, is remaining anonymous the key to satisfaction after winning the lottery, or will the win alone afford the winner some happiness? Swedish researchers have examined this question more rigorously. They surveyed winners of major prizes in the Swedish lottery, minor winners, and players who did not win for a total of 3,362 players. The surveys were taken from 5 to 22 years after the event. The findings are fascinating:
- Lottery winners were significantly more satisfied with their lives, and that extra satisfaction lasted for decades.
- Those who won hundreds of thousands were measurably more satisfied than those who won tens of thousands.
- The winners did not rapidly spend their winnings, and did not quit their jobs. They did tend to retire earlier.
- Oddly, the researchers found that winning the lottery did not affect happiness. It is thought that questions about happiness go to mood or feelings, while questions on life satisfaction trigger more broadly based introspection.
- Winning the lottery had no discernable affect on physical or mental health of the winners or their children.
They say money can’t buy happiness, but if managed properly, it can bring satisfaction. The 82-year-old man from Washington D.C. took all the right steps to ensure not only his satisfaction, but satisfaction for his loved ones and charities of choice. By working with an attorney and establishing various trusts, he was able to properly preserve his wealth. Finding the right trustee that will help with the professional management of a life-changing sum of money is no small task. As an independent trust company, Legacy is uniquely qualified to offer comprehensive services that combine multiple disciplines with fiduciary trust services. When you work with Legacy as a trustee, you can count on experience, objectivity, and continuity. For more information about our trust services, and the types of trusts we manage, visit our Trust Services page: https://www.lptrust.com/our-services/trust-services/.
If you are a Legacy client and have questions, please do not hesitate to contact your Legacy advisor. If you are not a Legacy client and are interested in learning more about our approach to personalized wealth management, please contact us at 920.967.5020 or email@example.com.
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Any developments occurring after July 1, 2022, are not reflected in this article.