Make Money

How to Give Money to Family After Winning the Lottery (15 Tips)

Brian Aird

October 26, 2022

If you want to know how to give money to family after winning the lottery, this is the perfect article for you.

It contains as many as 15 EPIC tips to really help you make the right decision!

Importance

It’s a Saturday and things seem to be going incredibly well and your way this day.

You found a penny on the street; you bought groceries at the store and the total was $77.11.

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Also, adding to what appears to be your incredibly lucky day, the palm of your hand begins to itch.

Finally, you give in and walk into the convenience store and fill out the lottery ticket with all of those special dates of your children’s birthday including your anniversary and wife’s birthday.

Taking the ticket over to the checkout counter you make your purchase your lottery ticket for $1.00 and say to yourself well that’s that.

Well, at least your investment of one dollar was worth a try.

For the sake of argument let us say that you win, and you feel an obligation to have your family share in your good fortune.

In preparation for that day let us look at 15 practical ways that you can provide financially for your family.

15 Epic Tips to Help Know How to Give Money to Family After Winning the Lottery

1. Stop

In our scenario, you have just won an exorbitant amount of money.

The first thing to do is to collect yourself before you collect your winnings and, yourself, by taking a deep breath and letting it all sink in.

The first step then and what to do is to do nothing.

Obviously, you will be filled with joy and excitement over your good fortune, but it is important not to do anything in the heat of the moment or in the midst of that excitement.

2. Protect Your Winnings

Prior to turning in your ticket, it is important to secure that ticket.

Put it in a safe place such as a safety deposit box or floor safe.

Other advice may include the formation of a Trust prior to turning in the winning ticket, deciding whether to stay anonymous by hiring a lawyer or a media representative.

3. Taxes

Remember, any winnings that you receive through a lottery or other windfalls will be taxed by the Internal Revenue Service.

Therefore, it is important to work through some models of how you want to see this money utilized in your own life and for the care of your family.

Of course, in consultation with a personal financial advisor, determine how much money it is that you want to see coming into your household every year.

For the sake of argument suppose you want to have $100,000 as your annual revenue.

Assuming a return on this money that you have invested at a rate of 4% you would need to have 2 1/2 million dollars invested in a portfolio.

This way, you would be living off of the interest.

Also, you need to consider that you will be paying taxes on this amount of money that you draw out each year.

For 100,000, let us assume that you would be assessed $34,000 in taxes each year.

To mitigate this tax requirement, there may be vehicles that can be set up to minimize the taxes that need to be paid.

Again, a tax lawyer or professional tax advisor is indicated.

4. Mum Is The Word

The temptation to shout out to the world or especially those within your sphere of influence is to share the good news and make them excited for you.

However, money is a great influencer.

Sometimes for good and sometimes for bad.

Therefore, it would be wise not to share this good news with everybody as you will most certainly be inundated with requests to be part of the distribution of this windfall.

5. Financial Advisor

Probably, the first investment that you should make with your newfound fortune is to engage a personal financial advisor.

This professional advisor will be able to offer you sound and objective advice on how to handle the money that you will be receiving, lessening the impact of taxes, and recommend sound financial steps that you can take.

This will help to maximize your distribution and invest your money so that it will provide a good solid return for you.

The understanding is that there are basically two options for an individual receiving their prize money.

One of those options is to take all of the money out in a lump sum or to spread out the distributions over a period of time.

6. Place In High-Interest Account

It is highly recommended that your first disbursement of money, while still in the process of making a plan on how you are going to manage your windfall, is to place any disbursements in a high yielding interest money market.

This will be to provide for you in the best interest possible but will not tie your money up over a long period of time.

7. Emergency Fund

Although an individual most likely would want to help out their family with monies received through their lottery winnings, it is also important to provide for yourself and your own family.

Therefore, a significant percentage of the money that you receive should be set aside as an emergency fund knowing that life still goes on and so do the financial challenges.

Therefore, if an emergency fund is set up, you wouldn’t have to worry about touching any of the other investments or worried about invading the principal area.

8. Quality of Life

It is important to research other individuals’ lifestyles of historical lottery winners.

Unfortunately, you will find a number of cases in which the significant amounts of money that were realized by individuals dramatically change their lifestyle and not necessarily for the better.

Many individuals spent like there was no tomorrow and bought items that would be considered luxurious and before long they were not only penniless but ended up declaring bankruptcy.

In some instances, the worst-case scenario is that people actually took their own lives.

Therefore, it is important to learn from these situations for you and for your family to not be mesmerized by dollar signs and to ensure that everybody uses this money to enhance their quality of life rather than detract from their quality of life.

9. Pay Off Debt

A wonderful financial gesture that a lottery winner could do for his or her family members is to pay off their debt.

Not only would this release them from their financial burden but would help to relieve associated stress for family members under the burden of debt.

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This would go a long way in spreading goodwill and practically helping a family member to realize the power of being debt-free.

10. Buy a Rental Home

A possibility that would not only help you as the lottery winner, but a family member would be to invest in a rental home.

This would be a good investment of your lottery winnings in purchasing property and you could allow a family member to live in the home rent-free.

This could help the family member by not having to pay monthly rent and help them financially as well with their personal finance budget.

11. Cash

If you wish to give your family members cash from your lottery winnings, there is a way that this can be accomplished and minimize taxes.

This money can be given to the various family members at a maximum of $15,000 (may change) per year.

This amount of money can be given to as many individuals or family members as you wish.

Also, if the family members are married, they each can receive 15,000 making the total annual exclusion amount of $30,000 for their household.

This legal way of minimizing taxes is allowed by IRS and is a provision in which this gift can be given tax-free.

It is important to remember, however, that any gift exceeding $15,000 (may vary) over the course of the year would be assessed a tax of up to 30%.

Of course, check with your personal tax professional.

12. Pay Schooling

An extremely generous way if you wanted to provide for your family members is to pay off any student loans that they may have incurred or you can set up a school trust fund for their children or your nieces, nephews, grandchildren, etc.

This action could possibly fall under the 529 college savings plan for each beneficiary that you choose to provide this extremely generous gesture.

The power of this action would be that you would be able to establish college funds for as many of my family members as you wish and would help the individual families of being less stressed out for college fees.

There may be tax advantages associated with this financial move.

As always, as it relates to tax matters, it is always important to consult with a professional tax advisor.

Learning more about a 529 plan can be studied by clicking here.

13. Pay Their Mortgages

Another option that you could provide for family members is to pay off any of the family member’s mortgages.

Again, anything over the maximum allowed gift would be taxable.

That tax would be paid by you.

Perhaps, the ceiling amount could be paid by your yearly gift towards the family member’s mortgage over the needed years and still keep within the yearly non-taxed limits of the gift.

Also See: How Much Money Does a Person Spend in a Lifetime.

14. Loan Them Money

Another way that you can help your family members is not by just giving them money outright, but by drawing up a contract with them in regards to their money.

This would not only benefit you by providing a bit back on your investment but also have them respect the process and themselves by not just taking a handout but being offered a hand up to help them with their indebtedness.

It is also important to remember that IRS, without signed loan agreements, will consider this money as a gift and you will be taxed accordingly.

It is critical that an interest rate be provided on the contract, a payment schedule with specific dates, and any collateral that has been provided against the loan.

It is also important to obtain signatures promising that they will pay back according to the terms of the loan contract.

15. Marital Risk

Another important tip to remember is that sometimes life can be messy.

It is not necessarily cut and dry.

By this it means that families don’t always stay together, couples don’t always stay married, and life doesn’t always end up being happily ever after.

Therefore, keep in mind what will happen if commitments are made, or money is given and there is a breakup in a family member’s home.

How would that look if a certain amount of money was given, and the assets needed to be divided?

Some experts suggest that rather than giving an outright gift that it is set up as a loan agreement and that legally classifies your gift accordingly.

This way, if there is a dissolving of a marriage, this loan agreement will ensure that your generosity is protected.

Check out the following Lottery and Gambling related articles for more:

Personal Story

I enjoy the odd trip to our local casino.

Sometimes I win, sometimes I lose and sometimes I get rained out.

However, when I win, I’m ecstatic and want to share with the other players at the table.

I often see their anguish and pain when they lose when perhaps they are gambling with money that should be utilized for another purpose.

Therefore, I enjoy quite immensely, the sharing of any possible windfall that I might get at a casino.

It is thrilling, exciting, and most rewarding to see their look of surprise and to realize that they may have dodged the gambling bullet of wagering more than they should have.

Giving Money to Family After Winning Lottery FAQs

What Would Most Likely Be the Worst Aspect of Family Matters as It Relates to Lottery Winnings?

If family became aware that you won a large sum of money through a lottery, it would seem that the worst aspect, as it relates to family, is the various guilt trips that might come into play.

Some of those guilt trips, to receive some of your monetary windfalls, would be family or relatives talking about blood being thicker than water, or that they need the money and if they didn’t have it then their family would suffer.

They might also try to lay a guilt trip by saying, do you remember, or they would bring up a time in your life where they may have been helpful and now feel like they should be repaid, etc.

Unfortunately, guilt can be a terrible thing.

What Could Possibly Be the Downside of Winning the Lottery?

The significant downside of people coming into an exorbitant about of money is that it is something that they are not prepared for.

Their lifestyle most likely up to this point has been one of living month-to-month.

Now with this wealth, they don’t know how to handle it and spend lavishly on things that they always dreamed about, and thought would satisfy them.

Ultimately, the realization of this kind of wealth so suddenly negatively impacts an individual to where they eventually have no money left over and may end up worse off before they hit the lottery.

Conclusion

Even if you did not win the lottery, just the mere fact that you are exploring options of helping out your family members if such an exciting event would happen speaks loudly about your commitment to family.

Good luck!

Again, this company has paid $25+ million to members: