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In Group Winners: can the payout other than split evenly ?

Topic closed. 18 replies. Last post 2 years ago by RedStang.

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Kentucky
United States
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February 14, 2006
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Posted: April 25, 2015, 7:16 pm - IP Logged

My comment was on combining family members and non-family members.

It seems that the family members needs to be in the group instead of the individual group winners saying their share is a family ticket.

It isn't possible to combine the 2 types.

Maybe it's a Canadian thing, but other than for a possible interesting news conference, it doesn't matter to US state lotteries if members of a pool that wins a jackpot are family, friends, co-workers or whatever. Lots of people run lottery pools that include family and non-family members.

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    NY
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    Member #23835
    October 16, 2005
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    Posted: April 26, 2015, 11:49 am - IP Logged

    My comment was on combining family members and non-family members.

    It seems that the family members needs to be in the group instead of the individual group winners saying their share is a family ticket.

    It isn't possible to combine the 2 types.

    Multiple family members can definitely be part of the same pool, but that's not what the OP was asking about. Obviously pools should have a written contract, and it's probably even more important if there are multiple members of the same family in the pool and one of them is running the pool.

    Even if you  don't have a written agreement the IRS is probably happy enough to believe that if you share a lottery prize with coworkers it's because you had a mutual agreement requiring you to share it, rather than simple generosity. When you share with family they seem to start from the assumption that you're simply being generous or acting out of a sense of familial responsibility rather than following through on a pre-existing agreement that requires you to share. The former is a contractual obligation, whereas the latter is a gift that's subject to gift tax rules. Since other pool members would have reduced shares if some of the shares go to multiple family members a written agreement might not be necessary, but leaving it to chance might cost millions in gift taxes.

    There's also no reason that you couldn't share your share of a pool with family members. You just have to be able to document the agreement that existed before the ticket becomes a winner. The IRS usually looks for a quid pro quo agreement, where what you've promised to family members is based on a similar promise they've made to you. You can't just promise them a portion of something that you might win, because that's just a gift that you'll make if you do win. What you can do is gift part of your share to others while your share is still only worth part of the few dollars you paid to the pool, since that's well below the annual gift tax exemption. If you do that you should expect that you'll have to prove that you really made an irrevocable gift that would apply to a winning ticket that's only worth 10k or 250k, as well as a jackpot winner that's worth millions. I'm guessing that most of the people who really would share part of a multi-million dollar prize would want to keep all of a prize that's not enough to spend the rest of their life on easy street, and I'm sure the IRS thinks so, too. As a result, I figure that any gift of a share has to be accompanied by an agreement that makes it easy for those receiving that gift to know if you've won and to enforce the agreement.

      maringoman's avatar - images q=tbn:ANd9GcTbRxpKQmOfcCoUqF2FyqIOAwDo7rg9G-lfJLAALPGWJWwiz19eRw
      Massachusetts
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      April 14, 2006
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      Posted: April 27, 2015, 7:30 pm - IP Logged

      This thread got me curious and when I searched around, I found this on the PA Lottery site.

      Can a group share a prize?

      Individual checks for group prize claims will be issued only for prizes of $50,000 or more where individual shares of the prize are $2,501 or more. 

       To request individual checks for qualifying group prize claims, winners must indicate on claim forms that they want individual checks.  Each member of the group must complete IRS form 5754 to accompany the claim form at the time of submission. Additionally, beneficiary forms will be provided to group members if individual shares are $500,000 or more.

      That money's gone fo ever

        RedStang's avatar - tallman zps6gf4inoc.jpg
        NY
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        January 21, 2012
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        Posted: April 28, 2015, 1:23 pm - IP Logged

        We have some in our group that split a ticket so if everyone won a mill, they would get 500k each.