Welcome Guest
Log In | Register )
You last visited January 20, 2017, 9:09 pm
All times shown are
Eastern Time (GMT-5:00)

How to disperse multi-million dollar winnings?

Topic closed. 23 replies. Last post 2 years ago by myturn.

Page 1 of 2
51
PrintE-mailLink
Avatar
New Member

United States
Member #166165
May 8, 2015
2 Posts
Offline
Posted: May 8, 2015, 6:31 am - IP Logged

We all fantasize about winning big money, and I've gone through scenarios in my head many times. But what always gets me is how would i be able to disperse / share my winnings with my family and close friends?

The way I understand it, I would have to pay the 39.6% federal tax (25% taken of the top), and 4.35% state tax (Michigan)

For all intents and purposes that's 45%. So say I win a big jackpot and take home $25M after 45% taxes. If I give $10M to my sister, does this mean she'd have to pay 45% tax on the $10M then? Could I pay the taxes for her, but wouldn't that tax money that I pay for her be taxable? Plus isn't there something like a luxury gift tax where if I give over $5M in my life I owe another 40% tax on anything I gift?

So the way I read it in the end:

I win $45M, pay $20M taxes and end up with $25M free and clear.

I give $10M to my sister, she pays $4.5M taxes, with $5.5M free and clear.

But then I pay $4M gift tax in addition? So I would really need $14M for her to end up with $4.5M? That's insane if I'm reading this right. Feds get $9.5M in addition to the $20M already paid?

    Saylorgirl's avatar - Lottery-065.jpg
    Indiana
    United States
    Member #129225
    June 13, 2012
    546 Posts
    Offline
    Posted: May 8, 2015, 7:32 am - IP Logged

    We all fantasize about winning big money, and I've gone through scenarios in my head many times. But what always gets me is how would i be able to disperse / share my winnings with my family and close friends?

    The way I understand it, I would have to pay the 39.6% federal tax (25% taken of the top), and 4.35% state tax (Michigan)

    For all intents and purposes that's 45%. So say I win a big jackpot and take home $25M after 45% taxes. If I give $10M to my sister, does this mean she'd have to pay 45% tax on the $10M then? Could I pay the taxes for her, but wouldn't that tax money that I pay for her be taxable? Plus isn't there something like a luxury gift tax where if I give over $5M in my life I owe another 40% tax on anything I gift?

    So the way I read it in the end:

    I win $45M, pay $20M taxes and end up with $25M free and clear.

    I give $10M to my sister, she pays $4.5M taxes, with $5.5M free and clear.

    But then I pay $4M gift tax in addition? So I would really need $14M for her to end up with $4.5M? That's insane if I'm reading this right. Feds get $9.5M in addition to the $20M already paid?

    This is how I think it plays out.  It is a gift to your sister she pays no tax on the money but you do.  You are allowed to use your lifetime gift tax which I believe is currently $5.4 million.  On the remaining  $4.6 million that you are giving your sister there will be an additional $1,840,000 which is a 40% tax and you are the one responsible to pay that tax.  Some states have a gift tax they impose also so you would need to take that into consideration.  Bottom line your sister gets to keep the 10 million and it cost you $11,840,000 plus any state taxes.  Any monies you give to anyone after you use your exclusion (other than the $14,000 you can give per year to an individual), you will be required to pay the 40% gift tax.

      savagegoose's avatar - ProfilePho
      adelaide sa
      Australia
      Member #37136
      April 11, 2006
      3316 Posts
      Offline
      Posted: May 8, 2015, 7:39 am - IP Logged

      this is why you decide who is getting gifts, and either trust fund , or assign them as part of the  owners of the winning ticket,  before having it  cashed out. get your legal and tax obligations  ducks in a row before you claim.

      2014 = -1016; 2015= -1409; 2016  = -1171; 2017 = ?  TOT =  -3596

      keno historic = -2291 ; 2015= -603; 2016= -424; 2017 = ? TOT = - 3318

        RJOh's avatar - chipmunk
        mid-Ohio
        United States
        Member #9
        March 24, 2001
        19901 Posts
        Offline
        Posted: May 8, 2015, 12:04 pm - IP Logged

        We all fantasize about winning big money, and I've gone through scenarios in my head many times. But what always gets me is how would i be able to disperse / share my winnings with my family and close friends?

        The way I understand it, I would have to pay the 39.6% federal tax (25% taken of the top), and 4.35% state tax (Michigan)

        For all intents and purposes that's 45%. So say I win a big jackpot and take home $25M after 45% taxes. If I give $10M to my sister, does this mean she'd have to pay 45% tax on the $10M then? Could I pay the taxes for her, but wouldn't that tax money that I pay for her be taxable? Plus isn't there something like a luxury gift tax where if I give over $5M in my life I owe another 40% tax on anything I gift?

        So the way I read it in the end:

        I win $45M, pay $20M taxes and end up with $25M free and clear.

        I give $10M to my sister, she pays $4.5M taxes, with $5.5M free and clear.

        But then I pay $4M gift tax in addition? So I would really need $14M for her to end up with $4.5M? That's insane if I'm reading this right. Feds get $9.5M in addition to the $20M already paid?

        "But what always gets me is how would i be able to disperse / share my winnings with my family and close friends?"

        You should ask your family and close friends how they plan to disperse/share their winnings with you if they win.  You might be surprised how they plan to do it and also get some ideas about how you should do it too.

        You could put all their names on the winning ticket and fill out the proper forms for each to pay their own taxes if they didn't mind how you choose to share it.  That way each would be dealing with lottery commission ,the federal and local tax departments on their own and never have to deal with you at all, not even to say "thank you".

         * you don't need to buy more tickets, just buy a winning ticket * 
           
                     Evil Looking       

          Raven62's avatar - binary
          New Jersey
          United States
          Member #17843
          June 28, 2005
          51138 Posts
          Offline
          Posted: May 8, 2015, 1:00 pm - IP Logged

          We all fantasize about winning big money, and I've gone through scenarios in my head many times. But what always gets me is how would i be able to disperse / share my winnings with my family and close friends?

          The way I understand it, I would have to pay the 39.6% federal tax (25% taken of the top), and 4.35% state tax (Michigan)

          For all intents and purposes that's 45%. So say I win a big jackpot and take home $25M after 45% taxes. If I give $10M to my sister, does this mean she'd have to pay 45% tax on the $10M then? Could I pay the taxes for her, but wouldn't that tax money that I pay for her be taxable? Plus isn't there something like a luxury gift tax where if I give over $5M in my life I owe another 40% tax on anything I gift?

          So the way I read it in the end:

          I win $45M, pay $20M taxes and end up with $25M free and clear.

          I give $10M to my sister, she pays $4.5M taxes, with $5.5M free and clear.

          But then I pay $4M gift tax in addition? So I would really need $14M for her to end up with $4.5M? That's insane if I'm reading this right. Feds get $9.5M in addition to the $20M already paid?

          There's an old process for disbursing Multimillion Dollar Jackpots, Do you know it?

          MTBDET: No.

          First, you must Win the Multimillion Dollar Jackpot!!!

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

            Igamble's avatar - spider
            nj
            United States
            Member #145657
            August 10, 2013
            1000 Posts
            Offline
            Posted: May 8, 2015, 7:04 pm - IP Logged

            Go and exist yourself from US  citizenship category ,that will cost 1350$,then get a EU citizenshp from cheapest avlb.(around 250.000)and THEN give 10million to your sister.

            The IRS WILL B HANDICAPPED Wink legally.Savings -about 1million bucks of the tax or more  !!!!

              mypiemaster's avatar - 2015021003pileofcash
              JACKPOT HUNTER

              United States
              Member #141034
              April 2, 2013
              1419 Posts
              Offline
              Posted: May 8, 2015, 7:13 pm - IP Logged

              When I was overseas, there is something we call "AFRICAN LOAN". Give your sister one of those and both of you will have nothing to worry about.

              Seek and ye shall find -Matt. 7:7 ...Ask and ye shall receive -John 16:24 ...Give and it shall be given unto you -Luke 6:38 ...Be careful what you ask for!!! -Mypiemaster 1:1

              Having Money Solves Problems That Not Having Money Creates Yes Nod ****John Carlton****

                Avatar
                Kentucky
                United States
                Member #32652
                February 14, 2006
                7344 Posts
                Offline
                Posted: May 8, 2015, 9:33 pm - IP Logged

                Go and exist yourself from US  citizenship category ,that will cost 1350$,then get a EU citizenshp from cheapest avlb.(around 250.000)and THEN give 10million to your sister.

                The IRS WILL B HANDICAPPED Wink legally.Savings -about 1million bucks of the tax or more  !!!!

                You obviously haven't researched "non-American" jackpot winners.

                Should a non-US citizen win a lottery prize, they are subject to federal withholding taxes for non-US citizens, which is 30% of their winnings. While this amount may vary depending on which state the winning ticket is claimed in, the amount that non-US citizens are taxed is very similar to that which is applied to US citizens.

                  Teddi's avatar - Lottery-008.jpg

                  United States
                  Member #142499
                  May 13, 2013
                  1203 Posts
                  Offline
                  Posted: May 9, 2015, 10:03 am - IP Logged

                  We all fantasize about winning big money, and I've gone through scenarios in my head many times. But what always gets me is how would i be able to disperse / share my winnings with my family and close friends?

                  The way I understand it, I would have to pay the 39.6% federal tax (25% taken of the top), and 4.35% state tax (Michigan)

                  For all intents and purposes that's 45%. So say I win a big jackpot and take home $25M after 45% taxes. If I give $10M to my sister, does this mean she'd have to pay 45% tax on the $10M then? Could I pay the taxes for her, but wouldn't that tax money that I pay for her be taxable? Plus isn't there something like a luxury gift tax where if I give over $5M in my life I owe another 40% tax on anything I gift?

                  So the way I read it in the end:

                  I win $45M, pay $20M taxes and end up with $25M free and clear.

                  I give $10M to my sister, she pays $4.5M taxes, with $5.5M free and clear.

                  But then I pay $4M gift tax in addition? So I would really need $14M for her to end up with $4.5M? That's insane if I'm reading this right. Feds get $9.5M in addition to the $20M already paid?

                  I think that's a big mistake. After paying 45% in taxes, why would you even entertain the idea of giving more than that away to Uncle Sam. If you want to give your sister that much, then split the lottery with her. She'll walk away with $12.5 million instead of the $10 million you intended on giving her, but if that's a problem, you can set it up so that she gifts the additional 2.5 million back to you and it would be tax free. 

                  Or give her enough to pay off all her bills and retire, say $4 million (because I don't think it's a good idea to give the lifetime gift allowance to any one person) then pay her an additional $14,4000 a year until her death. If she has kids, you can gift them $14,400 each as well. You can also add to that a trust that would take care of all her lifetime medical expenses, and the medical and educational expenses of her children. All of that should come pretty close to the $10 million, is completely tax exempt, and will have your sister living a life free from any financial worry.

                  The point is, you have options in which you can be financially generous to your sister without having to throw money away paying unnecessary additional taxes.

                    Avatar
                    New Member

                    United States
                    Member #166165
                    May 8, 2015
                    2 Posts
                    Offline
                    Posted: May 9, 2015, 2:28 pm - IP Logged

                    Thanks everyone. I think I have a better understanding. It would be a good problem to have. I'd rather it be a real problem than an imaginary one! :D

                      RJOh's avatar - chipmunk
                      mid-Ohio
                      United States
                      Member #9
                      March 24, 2001
                      19901 Posts
                      Offline
                      Posted: May 9, 2015, 2:48 pm - IP Logged

                      Thanks everyone. I think I have a better understanding. It would be a good problem to have. I'd rather it be a real problem than an imaginary one! :D

                      Be careful what you wish for, right now your family and close friends have no reasons to dislike you.

                       * you don't need to buy more tickets, just buy a winning ticket * 
                         
                                   Evil Looking       

                        Funtimz's avatar - Lottery-022.jpg

                        United States
                        Member #165244
                        March 30, 2015
                        229 Posts
                        Offline
                        Posted: May 10, 2015, 9:21 pm - IP Logged

                        As silly as it may sound, I would pay off my families major bills; mortgages, car loans, hospital bills etc (my sister has major bills in all of these. But then once they are paid off I would just give them a bit of cash because eliminating their bills, frees their own monies up.

                          music*'s avatar - nw bookeep.jpg
                          Happy California
                          United States
                          Member #157856
                          August 2, 2014
                          1550 Posts
                          Offline
                          Posted: May 13, 2015, 11:32 am - IP Logged

                          Funtimz, You really should consult with a CPA, " Certified Public Accountant", before giving any money away. There could be tax laws that you do not know about.  Gift taxes could bite you in the butt.

                           Chi ha danari, trova cugini. (He who has money finds many cousins.) Italian proverb

                            BobP's avatar - bobp avatar.png
                            Dump Water Florida
                            United States
                            Member #380
                            June 5, 2002
                            3112 Posts
                            Offline
                            Posted: May 13, 2015, 6:07 pm - IP Logged

                            Paraphrasing advice previously found on LP.

                            Open a million dollar checking account in the names of all your relations.  Provide each with a checkbook and instructions to only withdraw what they need. 

                            Move to a state with no city or state income taxes like Florida.

                            BobP

                              geerod2001's avatar - DiscoBallGlowing
                              canton,georgia
                              United States
                              Member #67345
                              November 23, 2008
                              28 Posts
                              Online
                              Posted: May 13, 2015, 6:26 pm - IP Logged

                              All jackpot winners should do some research into filing  IRS form 4852 when claiming lottery winnings.