I should clarify. I will care because I want to pay my taxes, not get thrown in jail, and not be in worse financial shape either. What I meant was “if I win that much money I’m not really going to care how much goes to taxes and if I managed to minimize that bill to the fullest extent possible”.
Speaking of the topic of gifting some it away and the tax implications, why not just name some of those people and charities directly as recipients of a portion of the prize money right from the beginning? Seems simpler.
Keep it simple, toss all in a trust account, set up the executor’s instructions, it’s no longer your problem…
I you have a descendants genealogy chart even better, sort it out in a spreadsheet as far as equal, or whatever percentage to children, grandchildren, etc, let it go, let it happen, let the tax man take their due, in the end what’s it matter, by the time in’s enacted, were long gone, most likely in an urn, tucked away, and the recipients will either make good use, or blow it, doesn’t matter…
No lotto winner here, exactly, but still orders of magnitude beyond earlier generations, life is good, we managed to help the grandkids along the way, maybe they can do the same… Relax, enjoy the time we have, keep the close ones close…
Generally, lottery winnings can only be split among people who have a claim on the winning ticket. So, while you can split winnings among a group of people who you say helped purchase a ticket (and I’m not sure if any documentation would be required for that), it would be difficult to give some of the winnings to a charity to give it away, because it’s unlikely that charities are allowed to purchase lottery tickets.
Actually income taxes are your first consideration. They will withhold a chunk off the top. A different number if you choose an annuity rather than a lump sum. We are talking about gift taxes on what you give away and estate taxes on what you keep.
Death and taxes as they say. Over the Estate Tax Exemption it gets interesting. Time to hire those experts.
@aj485 and @MarkR I don’t think it’s that easy. The closest thing I’ve read about would be a Spousal Lifetime Access Trust (SLAT). But that generally only works if you have a very solid marriage to your original spouse and parent of your mutual children. In general, if you give away the tree or branches, you cannot retain the fruit from that.
Check Charitable Remainder Trusts. You give the assets to a trust, take income from it, and when you die, the rest goes to the charity(ies). From Fidelity Charitable Remainder Trusts | Fidelity Charitable
I’m looking into a CRUT (Charitable Unit Trust) to pay benefits to my heirs over the next 20 years. The minimum is 5% payout per year to all beneficiaries combined. Many charities will do the paperwork for you including tax returns. Your money is invested in a fund selected by the charity. Often they are conservative mostly bond funds that the charity uses to invest its endowment funds. Professionally managed.
Suppose the payout is 5% and the investment earns 5%. Over 20 years the investment doubles your money and your money is paid to the beneficiaries. Hence, your beneficiaries receive all of X spread over 20 years (and taxable at ordinary income tax rates) and after 20 years the charity receives X. Subject to investment performance of course and less expenses. And donor gets a tax deduction.
Seems like a good deal to me. But still collecting info to be sure no surprises.
While technically true, I think bjurasz point was that if someone’s handing you a 9-figure check, even if half (or heck, even 90%) of it goes to taxes, you’ll still have more money than you know what to do with. At least, that’s how I took it.
