I want to wish all of those who bought tickets in the MegaMillion $636 million jackpot in Pennsylvania and New Jersey. Winning the jackpot is a very happy and exciting event. It can facilitate previously unattainable dreams such as buying a home, starting a business or paying for a child to go to school. However, a very wise man once said "mo' money mo' problems."
Due to this sudden influx of income, your estate planning needs will immediately become more complex. That is why it is important to find a group of trusted advisors to help you handle the financial planning, insurance, income tax and estate planning issues that will arise.
Regarding the estate planning, it is important to protect your family's interests by setting up a living trust and specify that all lottery installments be trusted accounting income. This will preserve your unlimited marital deduction and ensure that your spouse (if applicable) will have income for the rest of his/her life after you pass. The trust should also specify the amount of each lottery payment is considered principle and how much is income. By doing this, you will avoid disputes between beneficiaries (often children), who receive the interest, and remainder persons (often grandchildren), who receive the principal. You may also want to set up trusts for your children to pay for college and find ways to lessen the impact of potential estate taxation.
Before you decide on implementing any advanced plans, you should consult with a good estate planning attorney to determine what the best plan for your specific situation is.