Powerball Winner Should Have Established a Blind Trust

on Friday, December 7, 2012

     On Friday, a 52 year old Missouri resident, Mark Hill and his wife Cindy claimed their portion of the $588 million Powerball jackpot.  The family chose to receive their winnings as a lump sum totaling $293,750,000, roughly $136.5 million after taxes. However, publicly claiming such a large winning can lead to many negative consequences. As Cindy herself states, “When it’s that big of a Powerball, you’re going to get people coming out of the woodwork, some of them might not be too sane, we have to protect our family. “ It’s odd that she acknowledged the dangers of claiming the lottery winnings but did not seek the proper legal and financial advice.
    I am neither a lawyer nor a financial planner, and of course you should consult with your own professionals before making any major financial decision. But in my opinion, In order to avoid the onslaught of friends, “new relatives”, and strangers asking for a portion of the winnings a blind trust could be set up. A blind trust essentially hides the name of the winner or beneficiary and the trustee is able to claim the prize on behalf of the trust without having to disclose the beneficiaries name to the public.  Many lottery winners have no idea how to financially manage such a large lump sum of cash.  Within a blind trust the money is managed by an executor with the assistance of financial advisors who help properly invest the money. This ensures that the beneficiary receives the maximum return on their winnings without having to actively do anything. Since the beneficiary does not know how their money is being invested they are able to keep their winnings confidential.
    People tend to shy away from blind trusts because they don’t want an attorney having complete control of their money. But what many people do not know is that when the trust is created there is a signed agreement between the executor and the beneficiary. Here the beneficiary is able to outline just how the executor is allowed to manage the funds, and how they would like to have the money distributed. For example, the beneficiary could set up the trust so that they would receive periodic payments over time. The beneficiary is also able to stipulate within this agreement that they can revoke the blind trust at any time for any reason.
    If Mark and Cindy wanted to avoid the potential complications of people asking them for money they should have taken the time to hire an attorney to establish and become the executor of the blind trust. After establishing an executor they should have hired a separate attorney to assist them in drawing up the agreement for the trust.  By doing this they are legally covering all their bases and are not allowing themselves to be taken advantage of by their own lawyer.  Now the lottery winner or winners can enjoy their winnings without all the annoyances of constantly being pestered for handouts.

0 comments:

Post a Comment

Keep in Touch and Subscribe:

Keep up to date with your Procurement & Strategic Sourcing News.

Procurement News RSS Strategic SourcerorRSS Feed
Follow GetSavings on TwitterTwitter/GetSavings
Friend Source One on FacebookSource One on Facebook