It’s everyone’s dream to win the lottery. Offices across the U.S. are teaming up to buy tickets now that the Mega Millions jackpot tops a billion dollars. However, if you actually win, you’re going to have a long list of issues to deal with. News radio WTOP turns to SmolenPlevy principal Dan Ruttenberg for five tips for your office’s Mega Millions pool.
“If you know you were going to win the lottery, you would certainly spend thousands to dollars to set up entities to ensure your privacy, and establish everyone’s governance rights, and rights to the money, but of course you’re not going to do that, because you don’t know that you’re going to win,” says Ruttenberg.
Here are his five tips for co-workers organizing a pool to play Mega Millions.
Establish proof of who bought into your office pool
“The only thing you want to do ahead of time in buying lottery tickets is establishing proof of who is a member, and what your numbers are,” says Ruttenberg. “A good idea would be to scan in a picture of the lottery ticket and email it to everyone in the group, so everyone knows what the numbers are.”
Protect your winning ticket by signing it
“If you actually win the lottery, one of the first things you should do is sign the back of the ticket, because tickets are bearer instruments (which means finders-keepers until it’s signed),” says Ruttenberg. “Make sure to leave enough space after your name to write in ‘trustee’ or ‘manager,’ if you decide to claim the prize through an entity.”
Do not tell anyone you won the lottery
“You should not tell anyone you won the lottery, with the exception of an attorney or other professionals who can help guide you through the process of claiming your prize,” says Ruttenberg. Then, lock it someplace safe.
Set up an LLC before claiming your lottery prize
If a group of people wins the lottery, setting up an LLC (a Limited Liability Corporation) to claim the prize can have several significant advantages. First, it can help keep everyone’s identity anonymous. Secondly, some states only allow one ticket to be distributed, and that can have some very adverse tax consequences that you can avoid through an LLC.
Place some of your winnings in a trust
“When you get some money, take a portion of it and put it into a trust to protect it from yourself and from others, such as family members, because sudden wealth is very challenging,” suggests Ruttenberg. “There are many stories of people who have lost all their lottery winnings in a very short period of time.”
Ruttenberg says “Pooling your money to buy lottery tickets can be a lot of fun but it can add a lot of complications.”
Listen to Ruttenberg on WTOP news radio below and read the full story here.
About the Author
Daniel H. Ruttenberg
Daniel H. Ruttenberg, JD, CPA, LLM is a principal with the firm. Mr. Ruttenberg received his Bachelor of Science degree with a double major in Accounting and Finance from the University of Maryland. He earned his Juris Doctor with Honors from George Mason University School of Law and his Master of Laws in Taxation with Distinction from Georgetown University Law Center. Mr. Ruttenberg also served as the Director of the Fairfax Bar Association (FBA) for seven years. During this period, he was also elected president – the youngest in FBA history and served as a member of the Board of Directors for the Fairfax Law Foundation.
