Most U.S. states make the lottery winner’s names a public record. The purpose for this is to keep the lottery transparent and above suspicion proving that real people actually win the jackpot. The problem is it could put you and your family at risk.
Five states already keep lottery winner’s names secret; they are Delaware, Kansas, Maryland, North Dakota, and Ohio. The key is you have to buy your ticket in one of those states to remain anonymous. Government officials from other states like Arizona and Pennsylvania are lobbying to change it, so lottery winner’s names remain anonymous, at least for a certain length of time.
There have been numerous stories in the news about brand new lottery winners being murdered or kidnapped or family members held for ransom. The danger is real, and you should consider it if you find yourself in the situation of suddenly being very rich after winning the lottery.
A blind trust is a type of “living trust” in which the beneficiary nor the grantor has any control or knowledge of what is being done with the assets. A trustee takes full control over the trust and manages without any input from either of them. There are two types. The first is revocable where the grantor can dissolve the trust and take back control and then there is irrevocable where it cannot be changed or terminated.
The primary purpose of blind trusts to avoid conflict of interest and it is most widely used in the political arena or when someone has insider information and does not want to be perceived as doing anything illegal or unethical.
More recently, blind trusts have been used to hide people’s identity when they have come into serious wealth by winning the lottery or inheritance. Sometimes they want to shield themselves from the public, and often it’s to keep dubious investment scammers and greedy relatives from knowing about their enhanced financial situation.
If set up correctly the funds from the winning lottery ticket can be deposited directly into the trust without the winner ever having to claim it. Their trustee can do everything on their behalf, retaining their privacy completely.
Other winners have used legal counsel to set up a trust within a trust. They first establish a “claiming trust” where the funds are deposited from the winning ticket. You would name this trust something distinct but not use your own name. Now that the funds are within this claiming trust, you can transfer it to a more permanent “bridge trust.” When setting up the claiming trust, you can name yourself the grantor, trustee, and beneficiary, so you don’t even have to give up control to anyone, and your personal details like your name and address remain private.
Experts remind you not to use your social security number when setting up the trust because of the Freedom of Information Act; your social security number could be traced back to you violating your anonymity. Although you don’t want to add more complexity to the situation, consider instead setting up an LLC to be the front for the trust. This way is anyone looking into who won the lottery; they would only see the name of the LLC, not your name.
Because you are first depositing the funds into the claiming trust, that is where your identity is protected. Your bridge trust does not have to be private; you can use your own name and identity to set it up and manage it. No one will be privy to the act of transferring the funds from one trust to another so you can remain utterly anonymous. You can keep the money in the bridge trust for as long as you want and manage it and dole out funds from there to charities or for your personal use.
If you suddenly find yourself in possession of a winning lottery ticket to a huge jackpot, before running to the lottery commission to claim it, take a bit of time to decide how you want to handle your privacy. A local lawyer can help you set up a blind trust or a combo claiming/bridge trust easily within just a few days.