A Practical Discussion on Advising the Lottery Winner

If someone in Florida wins the lottery, their advisors need to understand the tax issues related to their winnings. It’s important to plan ahead to save as much money as possible on income, gift, estate, and generation-skipping taxes. If a client wins, they should not sign the ticket until they figure out who owns it. The ticket should be kept safe, maybe even with security, until they can claim their winnings in Tallahassee. The ownership of a lottery ticket should be decided when it is first bought. If multiple people claim the ticket, only one person or group can win. If a family bought the ticket together, they can share the benefits and taxes. In a past case, a family successfully showed that they had formed a partnership to buy a winning ticket, which helped them with taxes. The Winkler family bought lottery tickets on their trips to the doctor’s office. They considered the tickets to be owned by the whole family. When they won, they decided to split the money: Mr. and Mrs. Winkler got 25% each, and each of their five children got 10%. They set up a partnership to claim the money. After Mr. Winkler died, his share of the partnership was valued at over $700,000. Mrs. Winkler decided not to take his share. In 1995, the IRS said Mrs. Winkler gave her kids half of the money from a winning Lotto ticket, leading to a tax issue. The family argued that the ticket was bought as part of a family partnership, even though the written agreement wasn’t signed until after the win. The court looked at the rules for partnerships and decided that the family had formed a valid partnership before the win, so they didn’t owe as much in taxes. The court decided that Mrs. Winkler bought a winning lottery ticket for her family partnership. Since there was no written agreement, the court said each family member had an equal share. This means the Winklers didn’t give their kids any money as a gift, so there was no tax issue. For the Gotrichs, their lawyer needs to figure out if there was an agreement before they bought the ticket and how the winnings were shared. If not, the IRS could say the kids got a big gift and the Gotrichs would owe a lot of taxes. The Gotrichs need to make a partnership agreement before claiming lottery winnings to avoid tax issues. They should also consider getting life insurance to cover future estate taxes. The Gotrich family needs to be aware of possible tax implications when passing on their lottery winnings to their children. They need to carefully plan how to use their $1 million exemption to avoid paying extra taxes. They should also set up a partnership with their children before claiming the money, and make sure to provide all necessary information to the state of Florida. Finally, they should be cautious about sharing personal information and consider using their attorney as a middleman for any communication. This article is about how lottery winners need to plan for taxes and financial issues. It’s important for them to get help from a lawyer to make sure they don’t lose too much of their winnings. This advice applies to all lottery winners, not just ones who won a lot of money. Linda Suzzanne Griffin is a lawyer in Clearwater who specializes in estate planning, wills, and taxes. She has advanced training in these areas and is recognized as an expert by a professional board. She used to work as an accountant before becoming a lawyer. This information is provided by the Tax Section.

Source: https://www.floridabar.org/the-florida-bar-journal/a-practical-discussion-on-advising-the-lottery-winner/