I’m a lottery attorney – here are the main reasons why winners get the lump sum and how to avoid high family inheritance taxes

A LAWYER gave lottery winners tips on how to avoid the tax burden and why most opt ​​for the lump sum.

The Florida attorney has been dubbed a “lottery attorney” after representing clients who won $1 billion in the 2021 Michigan Mega Millions Lottery.

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Kurt Panouses explained that Washington Post Why it might be better for winners to secure a lump sum of their winnings rather than annual payments for 30 years.

Taxpayers only pay the highest tax rate above a certain income.

With this in mind, opting for a 30-year installment plan can be seen as a better option in order to pay less tax in the long run and thus get more out of the profit.

However, Panouses cautioned winners to consider the stability of the tax system over the next three decades before making such a decision.

He said, “The 37 percent you’re paying now in 2023 is really a low-income tax bracket.”

In his view, the rate will increase over the next 30 years and the lottery winner would then pay a higher rate.

“That’s a big reason why a lot of people take the lump sum payment in a year and are done with it,” he said.

Panouses added, “You pay 37 percent and you’re done.”

In another long-term money-saving plan, he also encourages winners to review their estate plans before claiming their assets.

While there are horror stories about lottery winners wasting their newfound money and losing everything, most people hope their fortunes will last a lifetime.

Panouses warned that if the money is not spent during the winner’s lifetime, the federal government will miss out on an even bigger chunk of the jackpot in the form of estate taxes.

He explained that if the winner dies and there is more than $12.9 million left, around 40 percent of the remaining amount is deducted as estate taxes.

To prevent this, the lawyer advises the winners to consider giving the money to family and friends while they are still alive.

He also suggested creating a trust to hold the profits and naming a number of people as beneficiaries who would be paid a portion of the money.

While the beneficiaries have to pay the tax immediately due to the income from their share of the jackpot, they save on the inheritance tax, which would be significantly higher.

The US Sun has already reported on the transformation of the world’s richest lottery winner.