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North Carolina grandfather gives lottery winnings to granddaughter

Topic closed. 24 replies. Last post 1 year ago by KY Floyd.

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MillionsWanted's avatar - 24Qa6LT

Norway
Member #9517
December 10, 2004
1749 Posts
Online

Nice for her, but perhaps she should have given the lottery ticket to her grand child instead.

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    Simpsonville
    United States
    Member #163184
    January 22, 2015
    2284 Posts
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    Nice for her, but perhaps she should have given the lottery ticket to her grand child instead.

    Go re-read the article.  It said GRANDPA gave the ticket to his Granddaughter.

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      Marana AZ
      United States
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      August 3, 2013
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      I suppose he'll use part of the lifetime exclusion to avoid paying gift taxes on his win.

        mikeintexas's avatar - h87TsB4
        Texas Panhandle
        United States
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        December 20, 2012
        1660 Posts
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        I suppose he'll use part of the lifetime exclusion to avoid paying gift taxes on his win.

        That's exactly what I was wondering.

        Epstein didn't kill himself.

          KY Floyd's avatar - lysol avatar.jpg
          NY
          United States
          Member #23834
          October 16, 2005
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          "I guess he took care of whatever bills he had and or the house paid off feasibly,

          i would assume,"

          At 85 I'd sure hope he doesn't still have a mortgage. If he has trouble with other bills there's nothing to prevent the granddaughter from giving him some, or even all, of what she collects each year thanks to him. Given his age it wouldn't make much sense to claim the prize himself since his life expectancy is far shorter than his daughter's or granddaughter's. The prize is probably worth a lot more this way, so the granddaughter benefits more than she would if he collected the prize and then left his estate to her.

          I'm a bit curious about the lottery apparently letting a winner give a lifetime prize to somebody else. The story says he bought the ticket with her, but everything else in the story indicates that it was his ticket and she didn't start out with any ownership interest. It would have been  safer to just claim from th start that he bought the ticket for her in case the lottery didn't want to cooperate with a scheme that's likely to cost them an extra million over the next 50 years.

          "I suppose he'll use part of the lifetime exclusion to avoid paying gift taxes on his win."

          I'm also curious how the IRS treats a gift like this. I expect the most likely thing is that it's treated as an annuity, since that's what it is, and base things on the current value. For this particular gift I didn't see that it matters since there's no way to value it at an amount that  triggers a gift tax, assuming he's got a modest estate, even if  they treat the value as the expected lifetime payout. If they treat it as recurring annual gifts he can give her $15k as his annual exemption and the $10k balance against his lifetime exclusion. When he dies they could then treat the expected lifetime payout as part of his estate but even if the granddaughter lives another 100 years the payout would only be $2.5 million, letting him have another couple of million in the estate without exceed the exemption.

          OTOH, if the prize was 100k per year or his estate is worth $3 or $4 million then there might be gift taxes to deal with depending on how the IRS treats it.

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            Simpsonville
            United States
            Member #163184
            January 22, 2015
            2284 Posts
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            "I guess he took care of whatever bills he had and or the house paid off feasibly,

            i would assume,"

            At 85 I'd sure hope he doesn't still have a mortgage. If he has trouble with other bills there's nothing to prevent the granddaughter from giving him some, or even all, of what she collects each year thanks to him. Given his age it wouldn't make much sense to claim the prize himself since his life expectancy is far shorter than his daughter's or granddaughter's. The prize is probably worth a lot more this way, so the granddaughter benefits more than she would if he collected the prize and then left his estate to her.

            I'm a bit curious about the lottery apparently letting a winner give a lifetime prize to somebody else. The story says he bought the ticket with her, but everything else in the story indicates that it was his ticket and she didn't start out with any ownership interest. It would have been  safer to just claim from th start that he bought the ticket for her in case the lottery didn't want to cooperate with a scheme that's likely to cost them an extra million over the next 50 years.

            "I suppose he'll use part of the lifetime exclusion to avoid paying gift taxes on his win."

            I'm also curious how the IRS treats a gift like this. I expect the most likely thing is that it's treated as an annuity, since that's what it is, and base things on the current value. For this particular gift I didn't see that it matters since there's no way to value it at an amount that  triggers a gift tax, assuming he's got a modest estate, even if  they treat the value as the expected lifetime payout. If they treat it as recurring annual gifts he can give her $15k as his annual exemption and the $10k balance against his lifetime exclusion. When he dies they could then treat the expected lifetime payout as part of his estate but even if the granddaughter lives another 100 years the payout would only be $2.5 million, letting him have another couple of million in the estate without exceed the exemption.

            OTOH, if the prize was 100k per year or his estate is worth $3 or $4 million then there might be gift taxes to deal with depending on how the IRS treats it.

            Checked NC, MA, CT and OH L4L FAQ's etc.  OH had the full set of rules out there, perhaps other states too.  Seems like they, like other lotteries are bearer instruments.  Also it mentions about death of the claimant and various time examples.  Lots of legal mumbo jumbo.

              KY Floyd's avatar - lysol avatar.jpg
              NY
              United States
              Member #23834
              October 16, 2005
              4264 Posts
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              "bearer instruments."

              Which only means that there's not a record of who owns it. Just like cash. There's still an owner, and it seems clear that Grandpa was the legal owner until after finding out that the ticket won the lifetime annuity. 

              It's pretty clear that for income tax purposes you don't get the income until after submitting your claim, but you own the ticket and its (potential) winnings from the moment you purchase it (as everyone seems to agree in the thread about getting divorced after winning). I think in this case most people also agree that the gift, while it won't result in Grandpa owning any gift tax, had a value based on the ticket winning the lifetime prize. As I see it, Grandpa transferred a lifetime prize that had an  expected value when he was the owner. He's certainly got the right to transfer his property to others, but I don't see any reason other than courtesy that the lottery needs to increase the value of the prize when the acknowledged owner transfers it to somebody with a greater life expectancy.

              I wonder how many people here would tell the lottery that the lifetime prize they were claiming had been owned by somebody else who only gave it to them after finding out it was a winner?

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                Simpsonville
                United States
                Member #163184
                January 22, 2015
                2284 Posts
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                "bearer instruments."

                Which only means that there's not a record of who owns it. Just like cash. There's still an owner, and it seems clear that Grandpa was the legal owner until after finding out that the ticket won the lifetime annuity. 

                It's pretty clear that for income tax purposes you don't get the income until after submitting your claim, but you own the ticket and its (potential) winnings from the moment you purchase it (as everyone seems to agree in the thread about getting divorced after winning). I think in this case most people also agree that the gift, while it won't result in Grandpa owning any gift tax, had a value based on the ticket winning the lifetime prize. As I see it, Grandpa transferred a lifetime prize that had an  expected value when he was the owner. He's certainly got the right to transfer his property to others, but I don't see any reason other than courtesy that the lottery needs to increase the value of the prize when the acknowledged owner transfers it to somebody with a greater life expectancy.

                I wonder how many people here would tell the lottery that the lifetime prize they were claiming had been owned by somebody else who only gave it to them after finding out it was a winner?

                Don't you think red flags might go up if someone were stupid enough to do as you said in your last sentence?

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                  Chasing $ Millions.
                  White Shores- California
                  United States
                  Member #136473
                  December 12, 2012
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                  "He recently moved in with his daughter to be close to the family." They must have treated each other good in the past,so much so as to welcome him to live with them.I have heard of children shipping their aged parents off to retirement centers,care homes as though they would be too much of a burden to care for as they got older. This gentleman & this family have done right by each other. That's love for you.

                   * Voice of Reason *   

                   

                  People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

                    KY Floyd's avatar - lysol avatar.jpg
                    NY
                    United States
                    Member #23834
                    October 16, 2005
                    4264 Posts
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                    Don't you think red flags might go up if someone were stupid enough to do as you said in your last sentence?

                    Um ... Isn't that exactly what happened in this case?