If you happened to win the lottery, your money worries are over, right? Not exactly. If you don't protect your lottery winnings, you could end up with a lot less money than you think.
Winnings from huge lottery jackpots can develop into tax headaches if you leave your money in a simple savings account. You must reconsider your estate planning if you want to leave some of that windfall to your survivors.
Trusts are a great way to secure your winnings over an extended period of time. Lottery winners in Illinois have access to the same type of trusts that the general public can use to protect their winnings.
Trusts fall into two general types: revocable and irrevocable. A revocable trust allows you to change the terms during your lifetime, but you have no protection from creditors; conversely, an irrevocable trust generally remains in place as you originally intended but gives you asset protection.
The only way to change an irrevocable trust is if the grantor, creator, trustee and beneficiaries agree to the changes. Irrevocable trusts protect lottery winnings because the assets legally do not belong to you. They also benefit your survivors because they are not subject to estate taxes from an irrevocable trust.
Blind trusts are also suitable as they can protect your winnings from unscrupulous relatives and friends who want your property.
Proper estate planning is appropriate whenever large sums of money and assets are involved. Lottery winnings make it even more so.
If you have recently received lottery winnings, think carefully about how to protect your earnings. Contacting an experienced estate lawyer may help guide your decision.
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