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About trusts and all the nitty gritty after winning

Topic closed. 10 replies. Last post 4 months ago by TheMeatman2005.

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Posted: July 22, 2016, 7:42 pm - IP Logged

Does anyone on LP work in the financial and/or legal arena with knowledge on trusts

After the big win, the general consensus is put your winnings in a trust of your choosing....If the money is not growing through investments, my understanding is that you will not be taxed again. (correct me if i am wrong)

My curiosity lies in the money that is dispersed from the trust to you thereafter. My little reading online and on the IRS website deems that this is now classified as income, and is liable to be taxed as every other form of income.

 

Is this pretty much what either one of us will deal with after we win (WinkWink) ....a second tax on your money? Or am I missing something.

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    LA Ca.
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    Posted: July 22, 2016, 11:50 pm - IP Logged

    Depends if the  $$ was taxed as income before it went into the trust. If you had already paid income tax on  the (principal)  money then you'd only pay taxes on the dividends & interest earned, not the original lump sum. That only gets taxed once as income.

     

     This kinda explains it:

     

    http://www.investopedia.com/ask/answers/101915/do-beneficiaries-trust-pay-taxes.asp

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      Posted: July 23, 2016, 2:03 pm - IP Logged

      Tax issues aside, Does a trust offer protection of money being "untouchable" if the winner is sued? And can the trust be set up where money is released as requested by the trustees, not knowing in advance when they would want money to be released?

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        LA Ca.
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        Posted: July 23, 2016, 2:19 pm - IP Logged

        Tax issues aside, Does a trust offer protection of money being "untouchable" if the winner is sued? And can the trust be set up where money is released as requested by the trustees, not knowing in advance when they would want money to be released?

        I think it would depend on what you may get sued for. For instance, if the trust (with you as trustee) effectively owns the vehicles you drive & you get in a wreck, then the trust may be on the hook. But..... if you personally own the vehicles that you drive, then the trust isn't involved, even if you bought them with money you received from the trust. Ditto with homes or businesses.

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          Winning makes me smile.
          bel air maryland
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          Posted: July 23, 2016, 4:50 pm - IP Logged

          Depends if the  $$ was taxed as income before it went into the trust. If you had already paid income tax on  the (principal)  money then you'd only pay taxes on the dividends & interest earned, not the original lump sum. That only gets taxed once as income.

           

           This kinda explains it:

           

          http://www.investopedia.com/ask/answers/101915/do-beneficiaries-trust-pay-taxes.asp

          Good info there. Thanks Rexer90.

          "You can observe a lot just by watching." Yogi Berra, Hall of Fame baseball player.

          The numbers will tell you what numbers to play. Pay attention to the numbers.

          Don't just think outside the box, crush it.

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            Baton Rouge, LA
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            Posted: July 24, 2016, 1:56 pm - IP Logged

            I think it would depend on what you may get sued for. For instance, if the trust (with you as trustee) effectively owns the vehicles you drive & you get in a wreck, then the trust may be on the hook. But..... if you personally own the vehicles that you drive, then the trust isn't involved, even if you bought them with money you received from the trust. Ditto with homes or businesses.

            Not sure about liability, but one thing trusts can do is make it hard to find your assets and if you're not seen as someone with deep pockets, someone out for money may not want to bother with you. If you're in an auto accident or something happens on your property, have a good amount of liability insurance to cover it.

            This subject I think overlaps on another thread in this forum, "Strategy for Remaining Anonymous," which is here:

            https://www.lotterypost.com/thread/304797

            Prisoner Six

            "I am not a number, I am a free man!"

              TheMeatman2005's avatar - lightening
              Brooklyn, NY
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              Posted: July 24, 2016, 4:05 pm - IP Logged

              These questions will all be answered by the professional financial adviser, lawyer and all the other sucks you get in a row when winning.

              Win it first, then get all your questions answered before claiming the jackpot.

              The Meatman

              “The quickest way to double your money is to fold it in half and put it in your back pocket.” Will Rogers

              Winning happens in a flash, Like A Bolt Of Lightning!  Patriot

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                Posted: July 24, 2016, 4:11 pm - IP Logged

                These questions will all be answered by the professional financial adviser, lawyer and all the other sucks you get in a row when winning.

                Win it first, then get all your questions answered before claiming the jackpot.

                Very very very true...

                But, it is always best going into such situations with a skeleton of what you want and then the professionals can fill in the rest. Professionals are not all equal in their intent (TN winners come to mind)

                Educate yourself, as much as you can. Even if you never win...but if you do, in all the excitement you know what questions to ask first or at least give them an idea of what you envisioned for yourself and your new found wealth.

                  TheMeatman2005's avatar - lightening
                  Brooklyn, NY
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                  Posted: July 24, 2016, 5:16 pm - IP Logged

                  I just read a very interesting article on the subject of this post.

                  Something for every prospective winner

                  https://www.nerdwallet.com/blog/investing/dear-powerball-winner-make-no-sudden-moves-until-you-read-this/

                  The Meatman

                  “The quickest way to double your money is to fold it in half and put it in your back pocket.” Will Rogers

                  Winning happens in a flash, Like A Bolt Of Lightning!  Patriot

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                    Posted: July 24, 2016, 5:37 pm - IP Logged

                    I just read a very interesting article on the subject of this post.

                    Something for every prospective winner

                    https://www.nerdwallet.com/blog/investing/dear-powerball-winner-make-no-sudden-moves-until-you-read-this/

                    Thanks for the link. That site has some pretty good articles for those of us that haven't (yet) won a jackpot too.

                      TheMeatman2005's avatar - lightening
                      Brooklyn, NY
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                      Posted: July 24, 2016, 5:44 pm - IP Logged

                      Thanks for the link. That site has some pretty good articles for those of us that haven't (yet) won a jackpot too.

                      I thought so too.

                      Hopefully these ideas will come in handy for one of us....one day soon (like this Wednesday Wink)

                      The Meatman

                      “The quickest way to double your money is to fold it in half and put it in your back pocket.” Will Rogers

                      Winning happens in a flash, Like A Bolt Of Lightning!  Patriot