Posted on 01/26/2014 10:17:02 AM PST by Innovative
Yes, good point, loan companies have been targeting trust babies for years.
The reason why people take cash instead of the installment payments is the UNITED STATE FEDERAL ESTATE TAX imposed upon the estate of the decedent, due and payable nine months after death in CASH. The IRS calls the payments “Income in respect of a decedent”, you own it and anything you own in included is the asset calculation that will be subject to the estate tax.. which can be as high as 50%.
The problem arises in that the estate does not have the cash on hand because it is coming in future down the road payments but the estate tax is payable NOW. Taking the winnings in cash will not eliminate the estate tax but the money is there to deal with the IRS in the ninth month when the estate has to make the estate tax payment.
And at that point I don’t care anymore.
Anyway, I just hate to give up that much money. The current PowerBall is $171 Million. Cash Value is $97.6 Million.
So you’re giving up almost 43% of your winnings, about $74 Million by taking the Cash Value.
Who can you trust?
They invest that money and it costs them nothing to pay you your jackpot over 30 years. It is false advertising to say it is a $171 million jackpot. If it was anybody but government doing it they would be up on charges.
Mo Money Mo problems
http://youtube.com/watch?v=gUhRKVIjJtw&desktop_uri=%2Fwatch%3Fv%3DgUhRKVIjJtw
Given my track record with lottery tickets(it is big news if I match ONE number)it is a moot point, but I would make sure that I couldn’t spend it in large chunks without considerable effort before I claimed my winnings. I know that I would spend more of it than I thought I could, so I would probably give myself an allowance for buying certain stuff like a boat and tow vehicle, buy some land and a few things that go bang, but leave most of the money relatively untouchable and live on the interest. I would also set up a charitable trust and use that for tax deductible giving. Otherwise, I would go Galt and have as small of a government footprint as possible and limit my exposure to scammers and moochers.
When the jackpot is big enough, the odds discounted value of the ticket exceeds the purchase price.
It’s like flipping coins when you pay $1 for a 50/50 chance to win $3.
The irony here is that people who manage their finances well and would be best suited to handle a lottery windfall are also the least likely people to play a lottery because lottery tickets are a poor investment. This basically ensures that most lottery tickets are going to be people who do not have good control over their finances and are not sophisticated enough to hire a good accountant and lawyer. Instead, they are prey to “Better call Saul” shyster types who will take them for every dime they can.
what a blithering idiot
What, you don't think Billy Bob and Algore helped her out in her time of need? I can't imagine...
And that's the root of most of these hard-luck stories with lottery winners. You CANNOT use your money to make friends and family happy. It is a losing battle. You give a little bit to one family member to help them out of a bind and others are going to demand "their fair share." The more money you hand out, the more of your friends and family will feel slighted and accuse you of favoring others more than them. You handing them free money will not fix their problems - rather it will reinforce their bad habits and give them an appetite that requires ever increasing sums of money.
It will never end until you either run out of money or fall victim to some sort of misadventure, likely brought about by a jealous family member or friend.
Best bet is to take a hard line from the start and tell our friends and family "No handouts. Period." And be sure you stick to it. Then hire an accountant you can trust and invest the bulk of your money where the principal is tied up and you have no easy access to it yourself. If your winnings are large enough, you can live a comfortable lifestyle on the interest while protecting and even growing the principal.
You also may need to move elsewhere and only stay in contact with friends and family that you trust.
A lot of bankrupt former professional athletes started out thinking the same thing.
If you take the $97.6M and invest it wisely, the cash flow over 30 years may be significantly more than what you lost by not taking the annuity.
Then again, "wisely" does not describe the average winner.
On more than one occasion I have seen individuals at a store plopping down $20 to as much as $50 to buy lottery tickets. I know what socio-economic demographic group they come from, it's obvious to the naked eye.
I don't buy lottery tickets. I understand statistical chance.
The kids still have summer jobs if they want spending money. The oldest got a car when he turned sixteen, it was second hand and he has to pay for insurance and gas.
They were serious happy hardworking people before they won and they are the same afterwords.
It seems like people who had common sense before winning kept doing things that made common sense.
I love the story of the young man who worked at McDonalds his whole life and when he won $1 million, he bought a Subway franchise. It was his dream, and it came true.
And he manages it.
Great happy ending.
I could never figure Jack Whittaker.
he was already really rich when he won the $330 million, and was obviously no dummy before winning, but became stupid afterwards.
WTF did he take a suitcase to a strip club, filled with $500K? And it got stolen out of his car. Then he did it AGAIN.
Plus he lost his granddaughter to a drug overdose.
That was just terribly sad.
Thanks, that sounds good!
Yes, and most of them were “buying” friends.
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