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Is it possible to remain anonymous in NJ through a trust or attorney?

Topic closed. 32 replies. Last post 10 years ago by MegaWinner.

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MegaWinner's avatar - Lottery-029.jpg
New Jersey
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Posted: March 3, 2007, 1:07 am - IP Logged

Is it possible to remain anonymous in New Jersey through a trust or attorney after winning the Mega Millions Jackpot?  I have often wondered about this and would like to know so I can be prepared when I win (oh yeah, I WILL win lol!).

Also, am I right to say that if you have a list of people you want to share the winnings with at the time of claiming the prize, the money will not be "double taxed".  Meaning if I got the money first and paid taxes on it then dispersed the money to the people on my list, then the money would get taxed again when they got it.  As opposed to dividing the money up right from start.

 

Example.  Jackpot = $5 million cash after 25% tax withholdings.  I want to give $100,000 each to 5 people.  I tell my attorney to have them divide the money up front so that I receive my check for $4.5 million and each person receives their check for $100,000 each. 

 

Can someone clarify this for me please? 

    twisted's avatar - underground
    New Jersey
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    September 25, 2003
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    Posted: March 3, 2007, 1:15 am - IP Logged

    Is it possible to remain anonymous in New Jersey through a trust or attorney after winning the Mega Millions Jackpot?  I have often wondered about this and would like to know so I can be prepared when I win (oh yeah, I WILL win lol!).

    Also, am I right to say that if you have a list of people you want to share the winnings with at the time of claiming the prize, the money will not be "double taxed".  Meaning if I got the money first and paid taxes on it then dispersed the money to the people on my list, then the money would get taxed again when they got it.  As opposed to dividing the money up right from start.

     

    Example.  Jackpot = $5 million cash after 25% tax withholdings.  I want to give $100,000 each to 5 people.  I tell my attorney to have them divide the money up front so that I receive my check for $4.5 million and each person receives their check for $100,000 each. 

     

    Can someone clarify this for me please? 

    As far as I know its not possible to remain anonymous in NJ.  NJ wont let a blind trust claim a jackpot and wont allow the winner to claim anonymously in any other way.

    You cant just make up a list of people you want to share the winnings with at the time you claim.  You can share the winnings with your spouse without a problem, but sharing with anyone else will require you to produce evidence that you had "pooled" your money to buy tickets and you would also have to show how much each player contributed to the "pool" so the winnings could be split accordingly.

      MegaWinner's avatar - Lottery-029.jpg
      New Jersey
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      Posted: March 3, 2007, 1:37 am - IP Logged

      So the money will be double taxed anyway?

       

      I figured, the cash value is $7million.  After the 25% federal witholdings, you will see roughly $4.5 million.  So its already taxed.  If I wanted to give my mom and father 1 million each, they would have to pay taxes on it again? 

        twisted's avatar - underground
        New Jersey
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        Posted: March 3, 2007, 2:01 am - IP Logged

        So the money will be double taxed anyway?

         

        I figured, the cash value is $7million.  After the 25% federal witholdings, you will see roughly $4.5 million.  So its already taxed.  If I wanted to give my mom and father 1 million each, they would have to pay taxes on it again? 

        The federal tax would be 35% in total because you would fall under the highest tax bracket if you win a multi-million dollar jackpot.  They only withhold 25% but you will owe another 10% at the end of the year .  If you give your father and mother $1 million each, you would owe "gift tax" on the 2 million you gave away.  So yes, the money will be double taxed if you do it that way.

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          NY
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          Posted: March 3, 2007, 3:03 am - IP Logged

          So the money will be double taxed anyway?

           

          I figured, the cash value is $7million.  After the 25% federal witholdings, you will see roughly $4.5 million.  So its already taxed.  If I wanted to give my mom and father 1 million each, they would have to pay taxes on it again? 


          If a lottery ticket costs $1 then it's only worth $1 right up until the moment that the drawing changes its value.  If you give a share to somebody while the ticket is worth $1 then they become a co-owner. As a co-owner they're entitled to a share of any winnings and they are then obligated to pay taxes on their share. If you wait until the ticket becomes a winner you're the sole owner of the ticket and anything you give to somebody after that is a gift of *your* cash. If you give an individual more than $12,000 there will be a gift tax and the person giving the gift pays the taxes. If you can't convince the IRS that you had an agreement to share any winnings before the drawing they may decide you're the sole owner and demand gift taxes on any money you give to others. Trying to keep 90% for yourself and giving 2% to each of 5 people is a very good way to demonstrate that the money is agift and that those people didn't really own shares of the ticket(s).

          Even if you don't have to pay a gift tax, giving a large sum to your parents might be a really bad plan. At some point they're going to die and if their estate is large enough the IRS may take a chunk of it. It might make more sense to buy a house as an investment and let them live in it, which would allow them to sell their current house. They could even sell it to you, possibly above market value, and not have to move. You could still give them 12 grand each, and if you're married your spouse could also give them 12 grand each. The IRS probably wouldn't notice if they paid cash for a lot of their everyday expenses such as groceries, gas and dinner out, either.

            Todd's avatar - Cylon 2.gif
            Chief Bottle Washer
            New Jersey
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            Posted: March 3, 2007, 8:53 am - IP Logged

            So the money will be double taxed anyway?

             

            I figured, the cash value is $7million.  After the 25% federal witholdings, you will see roughly $4.5 million.  So its already taxed.  If I wanted to give my mom and father 1 million each, they would have to pay taxes on it again? 

            Believe it or not, NJ is actually one of the best states for lottery winners, because there is no state tax on lottery prizes, only Federal.

            With regard to your first question about being anonymous, NJ even allows people to search for winners by zip code.  There is absolutely no privacy in NJ if you're a big winner.  The best thing to do would be to move.

             

            Check the State Lottery Report Card
            What grade did your lottery earn?

             

            Sign the Petition for True Lottery Drawings
            Help eliminate computerized drawings!

              MegaWinner's avatar - Lottery-029.jpg
              New Jersey
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              Posted: March 3, 2007, 9:41 am - IP Logged

              How much is the gift tax in New Jersey?

                Todd's avatar - Cylon 2.gif
                Chief Bottle Washer
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                Posted: March 3, 2007, 10:09 am - IP Logged

                How much is the gift tax in New Jersey?

                I have no idea.

                Generally speaking, you can give anyone a tax-free gift, one time only, of up to $10,000 from one source of funds.

                 

                Check the State Lottery Report Card
                What grade did your lottery earn?

                 

                Sign the Petition for True Lottery Drawings
                Help eliminate computerized drawings!

                  MegaWinner's avatar - Lottery-029.jpg
                  New Jersey
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                  Posted: March 3, 2007, 10:23 am - IP Logged

                  I just did some research.  It looks like if I won the $135,000,000 (after taxes @ 35%) and wanted to give away $60 million of that to close family and friends, that amount is effectively reduced to $32,400,000 after taxes @ 46%.  So I could actually only give away that amount which effectively reduces everyone's planned share by almost half.

                   

                  If that isn't thievery then I don't know what is.

                    Raven62's avatar - binary
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                    Posted: March 3, 2007, 11:26 am - IP Logged

                    How much is the gift tax in New Jersey?

                    If you give someone money or property during your life, you may be subject to federal gift tax.

                    Generally, you do not need to file a gift tax return unless you give someone, other than your spouse, money or property worth more than the annual exclusion ($11,000 in 2002, 2003, 2004 and 2005; $12,000 beginning in 2006) for that year. Although a return may be required, no actual gift tax will become payable until the cumulative lifetime taxable gifts exceed the applicable exclusion amount. The donor is primarily responsible for the payment of the Gift Tax.

                    2007 Estate and Gift Tax Rates
                    Column A Column B Column C Column D
                    Taxable Taxable Tax on   Rate of tax on
                    amount amount amount Excess over amt.
                    over     not over in Col A in Col A - Percent
                    0      10,000      0      18
                    10,000      20,000      1,800      20
                    20,000      40,000      3,800      22
                    40,000      60,000      8,200      24
                    60,000      80,000      13,000      26
                    80,000      100,000      18,200      28
                    100,000      150,000      23,800      30
                    150,000      250,000      38,800      32
                    250,000      500,000      70,800      34
                    500,000      750,000      155,800      37
                    750,000      1,000,000      248,300      39
                    1,000,000      1,250,000      345,800      41
                    1,250,000      1,500,000      448,300      43
                    1,500,000      2,000,000      555,800      45
                    2,000,000      ..............      780,800      46

                    Gift tax lifetime exemption is $1,000,000 for 2007.

                    A mind once stretched by a new idea never returns to its original dimensions!

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                      California
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                      Posted: March 3, 2007, 11:32 am - IP Logged


                      If a lottery ticket costs $1 then it's only worth $1 right up until the moment that the drawing changes its value.  If you give a share to somebody while the ticket is worth $1 then they become a co-owner. As a co-owner they're entitled to a share of any winnings and they are then obligated to pay taxes on their share. If you wait until the ticket becomes a winner you're the sole owner of the ticket and anything you give to somebody after that is a gift of *your* cash. If you give an individual more than $12,000 there will be a gift tax and the person giving the gift pays the taxes. If you can't convince the IRS that you had an agreement to share any winnings before the drawing they may decide you're the sole owner and demand gift taxes on any money you give to others. Trying to keep 90% for yourself and giving 2% to each of 5 people is a very good way to demonstrate that the money is agift and that those people didn't really own shares of the ticket(s).

                      Even if you don't have to pay a gift tax, giving a large sum to your parents might be a really bad plan. At some point they're going to die and if their estate is large enough the IRS may take a chunk of it. It might make more sense to buy a house as an investment and let them live in it, which would allow them to sell their current house. They could even sell it to you, possibly above market value, and not have to move. You could still give them 12 grand each, and if you're married your spouse could also give them 12 grand each. The IRS probably wouldn't notice if they paid cash for a lot of their everyday expenses such as groceries, gas and dinner out, either.

                      KY Floyd...quick comment about your answer of buying a house for investment purposes and letting your parents (or for that matter a sibling or even good friend) live in the house.  The IRS web site about Gift Tax says the following "Gifts include money and property, including the use of property without expecting to receive something of equal value in return."

                      Would the investment house fit this criteria?  I guess you could set up a program where the person living in the house is a caretaker of the investment, etc.  I agree that the Gift Tax seems excessive.  However if I were to win a HUGE jackpot, like the current Mega Millions, while it would hurt to pay taxes on gifts, to me it wouldn't be worth the risk of having the IRS show up and put me through an audit.  The IRS would show everyone that even a big lottery winner can't beat the system.

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                        Kentucky
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                        Posted: March 3, 2007, 12:04 pm - IP Logged

                        I just did some research.  It looks like if I won the $135,000,000 (after taxes @ 35%) and wanted to give away $60 million of that to close family and friends, that amount is effectively reduced to $32,400,000 after taxes @ 46%.  So I could actually only give away that amount which effectively reduces everyone's planned share by almost half.

                         

                        If that isn't thievery then I don't know what is.

                        It's the same process as in business where the companies are taxed on their income and the employees are taxed again when the get their paychecks.

                        I believe it's possible to designate family and/or friends as co-owners of the ticket, but don't know if the portions could be divided unequally.

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                          Posted: March 3, 2007, 4:44 pm - IP Logged

                          why not just say ya all chip in on the ticket and split it  100mill 10 peeps 10 mill a piece  each one gets taxs on thier 10 mill and spreads the nuicense of being not the only jackpot winner  probly better off if they allow more than 1 person to cash a ticket in

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                            NY
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                            Posted: March 4, 2007, 4:21 am - IP Logged

                            KY Floyd...quick comment about your answer of buying a house for investment purposes and letting your parents (or for that matter a sibling or even good friend) live in the house.  The IRS web site about Gift Tax says the following "Gifts include money and property, including the use of property without expecting to receive something of equal value in return."

                            Would the investment house fit this criteria?  I guess you could set up a program where the person living in the house is a caretaker of the investment, etc.  I agree that the Gift Tax seems excessive.  However if I were to win a HUGE jackpot, like the current Mega Millions, while it would hurt to pay taxes on gifts, to me it wouldn't be worth the risk of having the IRS show up and put me through an audit.  The IRS would show everyone that even a big lottery winner can't beat the system.

                            Of course you're correct about what the technical requirements are. There are very few things the IRS hasn't already considered and come up with rules for. This is yet another reason that  people with big money should consult professionals to get their detailed advice. Your options for helping somebody with housing would include cheap rent and hiring them as a caretaker. The value of housing  provided to an employee may be taxable, but for parents who are retired the tax would probably be modest.  If you rent for less than the  fair market value the IRS will also have a strong opinion, but how will they know that you didn't collect the $1000/ month listed in the contract? As a lottery winner your overall spending will make the modest amounts disappear into the background noise. A forensic audit of your parents would more easily suggest  that something is going on, but probably wouldn't give the IRS a very strong position. The reality is that it would be easy to give somebody a good bit more than the 12 grand per year that is exempt from the gift tax.

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                              California
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                              Posted: March 4, 2007, 11:56 am - IP Logged

                              It's the same process as in business where the companies are taxed on their income and the employees are taxed again when the get their paychecks.

                              I believe it's possible to designate family and/or friends as co-owners of the ticket, but don't know if the portions could be divided unequally.

                              Stack47...it is not quite that bad for companies.  In a business it is Reveune minus Expenes equals Income, more commonly noted as Profit.  Companies are taxed on money after paying the expense of wages.

                              KYFlyod...thanks for the reply.  If (when hopefully) I win I will be sure to get a great lawyer and tax accountant.