llc for lottery winnings

Thinking of Going Off the Grid After Winning the Lottery? Not So Fast

Everyone dreams of it: having a small piece of paper with the right numbers printed on it and winning the life-changing $200 million, $700 million or $1 billion jackpot. But what happens after you win?

Many winners decide to remain anonymous — or at least try to — but that can be difficult when many states demand that the winners of large jackpots show their faces at news conferences.

At his own news conference in Madison, Wis., Manuel Franco, 24, who in a Powerball drawing last month won $768 million, the third-largest jackpot in United States lottery history, seemed to be trying not to divulge too much information about himself, perhaps to keep random family members from coming out of the woodwork. Speaking with reporters on Tuesday, he declined to say where he grew up, where he lived, what kind of car he drove or where he used to work. (He quit two days after winning.)

Arizona, Delaware, Georgia, Kansas, Maryland, Michigan, Texas, North Dakota and Ohio allow lottery winners to conceal their identities if the winnings exceed a certain dollar amount, according to the National Conference of State Legislatures.

Other states, like New York, make it easy for winners to collect their prizes under the cover of an L.L.C. or an entity. But states like Wisconsin want winners to come forward to claim their prizes, although Wisconsin does not require them to appear at a news conference as Mr. Franco did.

After Mr. Franco’s $768 million win, “it seems a little ridiculous that there isn’t privacy when it comes to that,” Gary Tauchen, a Wisconsin state representative, said. “Certainly you have a lot of fourth and fifth cousins and it is just a situation when you’re under high stress.”

While Mr. Franco was answering questions about his lottery winnings as concisely as possible, Mr. Tauchen was introducing a bill seeking to ensure the privacy of lottery winners in Wisconsin.

“I know that it is one of those life-changing experiences when you need some time to adjust,” Mr. Tauchen said. “You don’t need the stress of other people putting pressure on you.”

And for jackpot winners like Mr. Franco, the pressure comes nearly immediately.

“For the next two weeks, people are going to be outside of his house,” Jason M. Kurland, a lawyer who has represented several winners of large lottery jackpots, said on Wednesday.

“I get those letters every week,” Mr. Kurland said, referring to the mail he receives intended for his clients. “They range from congratulatory letters to individuals having a tough time asking for handouts, to organizations looking for donations, to business men and women asking for investors.”

Mr. Kurland, who calls himself the Lottery Lawyer and represented the person in South Carolina who won the $1.54 billion Mega Millions jackpot last year, advises his clients to delete all their social media accounts before they claim their winnings. He also tells them to try to remove their address from public view as much as they can and to get new phone numbers. If there are children involved, he will hire security for the first couple of days.

Mr. Kurland tries to help his clients retain some privacy after they win, but if privacy is hard to achieve in 2019, anonymity is nearly impossible.

“It is very hard to participate in civil life and be anonymous,” Albert Gidari, the privacy director of the Center for Internet and Society at Stanford Law School, said on Wednesday. “You can’t buy a car in cash and avoid disclosing who you are because now car dealers are financial institutions,” Mr. Gidari said, adding that it was nearly impossible to transfer money in and out of the United States without disclosing who you are to the government.

“He can get a lot of lawyers and accountants and figure out how to move and hide a lot of that money at great risk to himself for not complying with government reporting,” Mr. Gidari said. “You can’t get very far, but you can get far enough to get some degree of obscurity, even if you can’t get anonymity.”

Last year the winner of a $560 million Powerball jackpot in New Hampshire took the state to court to retain her anonymity while claiming her prize. The woman’s lawyers argued that she would be accosted with requests for money, and the state argued that lottery winners must be disclosed to make sure that winners are not related to lottery employees and that winnings are distributed fairly. The court decided disclosing the winner’s name would be an invasion of privacy and allowed the woman to anonymously claim her winnings.

“You want to be able to enjoy this crazy amount of money you luckily won, but at the same time you want to keep your privacy, so it’s a balance,” Mr. Kurland said.

But going off the grid, setting up shop on the beach and enjoying the fruits of your ticket are not necessarily possible without informing the government.

“If you leave the country, it’s worse,” Mr. Gidari said, adding that leaving the country and failing to report assets in the United States and abroad could lead to losing those assets.

Some states allow the winners of large jackpots to remain anonymous, but is it ever possible to retain your privacy after a life-changing windfall?

How To Cash Your Powerball Winning Ticket Anonymously

Tweet This

If you win the Powerball tonight, it won’t make you a billionaire, unless you are pretty far along already, but if you take the lump sum, after tax you will probably be close to half a billionaire. My inner child insisted that I buy a Powerball ticket Sunday night and the stupid little brat is convinced we are going to win , so I’ve been planning. A couple of things I have decided for sure. I’m taking the lump sum, because I think I can have more fun that way and the other thing is that I want to be anonymous. And I have figured out how. I’m drawing a little inspiration from Mark Zuckerberg.

Gallery: 10 Steps To Take When You Win A Lottery Jackpot


Here is the drill. Thursday morning I will take my winning ticket and drive, very carefully, to my lawyer’s office. He or she will form a Limited Liability Company which will have me as the sole owner, but the law firm as the managing member. The law firm will then go cash the ticket and open accounts. The accounts will be overseen by this little boutique accounting firm that does family office work. Finally, I’ll have landed a decent account without having somebody else develop the lead for me.

The limited liability company will not save income tax or estate taxes. What it will do is provide a confidential vehicle to do all the whacky things that I want to do. Each one will be in a separate entity. There is the movie company Let Them Be Sea Captains LLC (Bonus points for any commenter who figures out what the first film will be). And then there are the strip malls. I really like them. The really dinky ones that don’t have a really big anchor. That will be Greenstrips LLC and it will strive to have tenants who only sell things that are good for people. I have a hunch it will turn out to be not very sound and am capping that one at $50 million or so.

Since the LLC will be a major account that pays me very well to oversee its affairs, I’ll have plausible cover to write a lot of $14,000 checks to a lot of my relatives and set up $70,000 529 plans for all the kiddies, while they have the impression that the ship that came in for me was kind of a PT Boat rather than an aircraft carrier. When it comes to charitable contributions , the LLC will write those checks.

Not A Tax Saving Vehicle

I spoke with attorney Howard Medwed of Burns and Levinson about the idea to see if he saw any flaws. He, of course, was thinking that I might have been trying to save transfer taxes, but that is not what I was about – just looking for the strong anonymity while maintaining control. Howard said that if he ever bought a lottery ticket, prior to the drawing he would send e-mails to his children and other natural objects of his bounty informing them that he had transferred an undivided interest in the ticket. Once he understood that I was just talking about anonymity, he thought it would work fine, since the lawyers would be sworn to secrecy.

Lottery Maybe Not Such A Great Idea

The reason Howard would never buy a lottery ticket himself is that he sees the lottery as a tax and since he spends a lot of energy trying to save taxes for his clients that it would be silly to pay a tax that he doesn’t have to. You can find a lot of material on why the lottery is a really bad deal. This piece by John Oliver is probably one of the best.

That Facebook Kid

The inspiration for using a limited liability company as a management vehicle for my lottery winnings and to preserve anonymity comes from Mark Zuckerberg and Priscilla Chan, who established the Chan Zuckerberg Iniitiative LLC as a vehicle for their philanthropic activities. An LLC does not give you any immediate tax benefits. What it does is allow you, thanks to the check-the-box regulations to have a legal entity that is separate from you without creating another layer of taxation or other complications. A single member LLC is disregarded for income tax purposes. Everything the LLC does is as if you had done it yourself.

Does It Work?

A good question that Howard raised is whether a limited liability company could cash a Powerball ticket. While cautioning me that “This may vary from state to state”, Christian Teja, Director of Communications for the Massachusetts State Lottery indicated that in Massachusetts a limited liability company can cash a ticket. I found that Powerball has a pretty complicated structure, so the rules can vary based on what state you bought the ticket in.

Not Original As It Turns Out

Honestly, I thought the idea up all by myself, but as it turns out, I’m not the first person to think of it. I found this story in the Washington Post – D.C. Man, 82 Wins Powerball but Chooses to Remain Anonymous.

Technically, the $79.6 million lump sum goes not to the man but to Rockson LLC, a limited liability company. Lottery officials said such a partnership permits the winner to protect his anonymity.

“He does not have to appear in documents,” Wilmot said.

I have been a CPA for over 30 years focusing on taxation. I have extensive experience with partnerships, real estate and high net worth individuals. My ideology can

I have been a CPA for over 30 years focusing on taxation. I have extensive experience with partnerships, real estate and high net worth individuals. My ideology can be summarized at least metaphorically by this quote: “I have a total irreverence for anything connected with society except that which makes the roads safer, the beer stronger, the food cheaper and the old men and old women warmer in the winter and happier in the summer.” – Brendan Behan. Nobody I work for has any responsibility for what goes into this blog and you should make no inference that they approve of it or even have read it.

VideoIf you win the Powerball tonight, it won’t make you a billionaire, unless you are pretty far along already, but if you take the lump sum, after tax you will probably be close to half a billionaire. My inner child insisted that I buy a Powerball ticket Sunday night and […]