How To Be a Secret Mega Multi-Millionaire
My dad is a dreamer. And one of his favorite things to dream about is winning the lottery. He’s told my siblings and me on more than one occasion, always in a fairly serious tone, what “code word” he’s going to relay to us via telephone if he wins the lottery. Upon hearing this code word, all of us are supposed to get to Ruidoso, New Mexico, as quickly as possible. It is there that we, as a family, will methodically map out our dream team of necessary advisors in light of the sudden public exposure that will befall us, given this out-of-the-blue windfall of good fortune. I don’t worry about the fact that I have forgotten the code word or that I have shared with you the Secret Meeting Location, because I don’t know that my dad (or anyone in my family) has ever actually bought a lottery ticket. For him, the dream of winning the lottery, or opening that breakfast dive in Costa Rica, or meeting Anthony Bourdain (RIP) is as good as—if not better than—the actual experience. Again, he’s a dreamer.
Ugh....the sudden public exposure. I don’t like that part. That kind of exposure will ONLY bring negative things into this otherwise positive experience because people will undoubtedly start coming out of the woodwork in search of just a little bit of the proceeds...some of whom you’ve met before and some of whom you haven’t...not to mention “charitable” organizations looking for donations that may not in fact be charitable at all. To hell with going down to the lottery office, signing the back of the ticket, and being forced to hold a gigantic check at a press conference while the future bad actors start lickin’ their chops. How do you avoid all that so that you can focus on things like sound investment strategies and starting charitable endowments and/or a foundation? (Come on...you only need so much money, so you gotta plan on giving a bunch to charity. As my dad likes to say, “You can only eat so much ice cream.”)
Only a small minority of states permit blanket anonymity of lottery winners. So if you don’t live in one of those states, what measures can you take to keep your identity a secret?
Well, the first thing you should do is create a trust with the appropriate Trustee—someone other than you or a family member...and someone you implicitly trust. (Several winners in the past have designated their attorney as their Trustee.) You can name a trust virtually anything you want, but you should use a name that would not clue people into the fact that it’s associated with you. For instance, I would not use “The Life is Legal Trust,” but I might opt for something more along the lines of “The Nihil Hic Est Fiducia!” which means “The Nothing to See Here Trust!” in Latin.
Once the trust is set up and you have your Trustee designated, the Trustee would be the one to sign the back of the ticket, march down to the lottery office, and claim the proceeds, rather than you doing it yourself. The contents of the trust, including the fact that you are the beneficiary, are never made public. What’s more, once the dust has eventually settled and the spotlight has been directed elsewhere, you can become your own Trustee if you so choose, and there are a myriad of other estate planning techniques available to help ensure that your assets are protected and that your privacy is maintained.
You may have heard about the New Hampshire woman who signed the back of her winning $560 million Powerball ticket (including her name, address, and telephone number). Upon realizing the media frenzy and the impending assault on her privacy, she asked lottery officials to keep her identity confidential and allow her to claim the proceeds through a trust like the one I’ve described above. They refused, citing New Hampshire’s “Right-To-Know” law, and so she sued the State of New Hampshire, stating that her right to privacy outweighed the public’s right to know who she was. The state argued that the requirement that lottery winners’ names be disclosed protects the process's transparency. When identities are made public, it’s proof that lottery insiders are not cheating the system in favor of themselves or people close to them. The judge, luckily, ruled in her favor, and she was able to keep her identity confidential.
In addition to assembling your team of legal and financial experts and setting up a trust, here are five more things to consider doing if you win the lottery:
Don’t buy anything significant for at least a year...but do consider paying off all of your debts.
Avoid sudden lifestyle changes. If you like your job, keep it! But, I get it...you’re gonna want to splurge just a little. Try to do it within reason and set aside a set “splurge sum.”
Live within a budget. I repeat. Live within a budget.
Invest prudently.
Update your entire estate plan. You just won the lottery. Don’t send it all back to the government when you die.
So now...I’m curious. What would you do with the money if you won the lottery? In the comments below, tell me what you’d spend it on and how you think it would change your life...or not.
