It might seem like winning the lottery could be the greatest thing in your life. Who wouldn’t want to suddenly win millions of dollars? However, if you plan to share your unexpected wealth with friends and family now instead of in an estate plan, you better plan ahead to do so. If you do not, the tax consequences could be more dire than you think.

When you win the big lottery, you have to pay personal income tax on your winnings. If you give anything to friends or family, you have to give less than the current gift tax exemption limit or additional taxes will need to be paid. Many people try to get around all of this by saying that they purchased the ticket jointly with friends and family. The IRS’s answer to that is “prove it.” The IRS will want to see some evidence that you planned to purchase the lottery ticket together. Vague recollections are not good enough. You will need written documentation that you can prove was created before you purchased the lottery ticket.

If you want to give money to friends and family members should you ever win the lottery, plan ahead. If you just won the big one and you are coming across this post, speak to an attorney about the best way for you to share your good fortune without getting into trouble with the IRS.

The Hartley Law Firm is a member of the American Academy of Estate Planning Attorneys.

Your estate plan is about more than just your money and your real property. For many people, the most important and difficult part of the plan is what to do with personal property. Sometimes, the personal property is valuable and important for that reason. Other items of personal property are important because of the emotional ties the planner or a family member has with them. Sometimes, personal property is important for both reasons.

Imagine that you have a copy of Detective Comics #27, Batman’s first appearance. What if you have multiple children who want it? You will need to decide who gets it or if it is to be sold. Even if you only have one child who wants the comic book, you will probably want to determine how to account for its value in that child’s share of the estate. If you don’t think something like a comic book can be valuable, a copy of this book sold for $1.075 million in 2010.

Most people don’t have something as valuable as the comic that first introduced the world to The Batman, but relative to the total value of your estate, you might have something of equal value. You might also have something of no monetary value that more than one person would like to inherit from you. Part of your estate plan should be planning for what happens to these items.

The Hartley Law Firm is a member of the American Academy of Estate Planning Attorneys.

New blog posts coming soon!

The Hartley Law Firm is a member of the American Academy of Estate Planning Attorneys.