Real estate planners bask in the glow of lottery winners

Representing a lottery winner might seem like a one-off proposition, but a cadre of estate and tax planners has found it to be an interesting area of ​​practice.

This past November, Hyman G. Darling, as trustee of the NorthLand Adventures Nominee Trust of Springfield, won a $16.35 million jackpot in the Massachusetts Lottery Megabucks Doubler drawing held on September 10th.

“He didn’t even know he won,” Springfield’s attorney says of his client. “His wife checked the numbers and started screaming and screaming that they won – and he couldn’t believe it.”

Darling, who has represented about a dozen lottery winners over the years, set up the trust to protect the identity of his client, who had purchased the winning ticket at Cumberland Farms in Ware. As trustee, Darling chose the annuity option over the prize fund, and received a check for $827,000 (before taxes), the first of 20 annuities.

Nancy M. Weissman of Belmont has represented clients with eight-figure awards. She sees her lottery practice as a natural extension of her estate planning work.

“What I do is manage the windfall,” Wiseman says. “When you go from making $40,000 a year to making a $4 million windfall, things change.”

Her role, Wiseman says, is to “help clients get better information so they can make better decisions that better fit their interests, goals, flexibilities, and tolerances.”

“What I do is manage the windfall. When you go from making $40,000 a year to making a $4 million windfall, things change.

— Nancy M. Wiseman, Belmont

For Beverly-based estate planning and tax attorney Joblin C. Younger, playing the lottery isn’t complicated.

“Since the lottery requires a physical person to enter, take a photo and claim the prize, the difficulty is when people don’t want to be known,” Younger says. “In this case, they hire an attorney to claim the award on their behalf either through a limited liability company or through a nomination fund.”

Find a niche

Younger started representing lottery winners as a result of a phone call from a customer who just won and wanted to know how to remain anonymous.

“There are several ways to do this, but the way I feel most comfortable is with a simple nominee fund with specific authority to claim and negotiate lottery proceeds,” he says.

The public tends to believe — wrongly — that the prize money a lottery winner puts in the bank is much larger than it actually is, which can only add to any unwanted attention, Younger says.

He points out that “when you win a million dollars, if you take the lump sum, you get $650,000.” “And they take withholdings, so what you really get is $400,000 and change.”

Darling, who heads the estate planning and legal department at Beacon Wilson, got into the business years ago when a lucky client called him after he won.

“We looked at all the different options as to whether he should accept the payment as a lump sum or over 20 years,” Darling recalls.

When Darling was awarded the prize as a trustee of his client’s trust, it was his face that appeared in photographs taken at the lottery committee.

“I started putting my name and picture on my (committee) website claiming prizes for winning tickets, and that motivated more people (to contact),” says Darling.

Keep customers happy

Although Darling’s lottery work is not a staple of his estate planning practice, it has become a valuable sub-discipline.

“It’s like setting up special needs trusts, or estate tax planning, or pet trusts,” he says.

For the little ones too, it’s a specialty.

“It’s just an hourly arrangement that’s usually $5,000 for the whole case. So it’s not a big money maker. Lawyers can’t charge a percentage or any other way that financial institutions charge,” he says.

Darling takes a considered approach to building trust with a potential client who may be wary of involving a third party when such large sums are at stake.

“I have a couple of clients who have won who are available to talk to my new clients who are lottery winners to make sure they understand that I will be honest and responsible about their ticket,” says Darling.

Wiseman says she is careful to maintain boundaries with clients who may be wary of letting others get involved in the process of claiming their prize.

“I don’t ask for the ticket,” Wiseman says. “I don’t touch the ticket until the customer hands it to me.”

But Darling also does everything it can to ensure its clients don’t fall short in terms of the sheer excitement of being a winner.

“When I go to the lottery committee to collect the ticket, I make sure that my customers go with me,” he says. “I want them to feel the excitement of claiming this ticket. I take a picture of them holding the ticket there. It’s not published, but they keep that big fake ticket, and they go through the process with me.”

Who needs a lawyer?

Although one might assume that the first step in the process is to claim the prize at the lottery committee before the ticket is lost, destroyed or falls into the wrong hands, Darling says it’s not quite that simple.

“There is much more to it than just claiming a ticket,” he says. “The first thing is to maintain the customer’s privacy. If it’s a big ticket, you can’t imagine how many people are there (looking at you).”

Younger says clients have a variety of reasons for requesting anonymity.

“Some of my claimants are public servants,” he says. “Some of the people I’ve worked with have kids to support. If it’s known they won the lottery, the kids will come asking for help.

Younger recalls a client who was in recovery and had a checkered history.

“He had a past that he wanted to leave in the past, and he didn’t want his old friends back,” Younger says.

And since Darling’s name is published when he claims the prize as a trustee, the attorney has experienced first-hand what it means to be associated with the winning ticket.

“I am overwhelmed with phone calls,” he says.

Younger has also witnessed the unwanted attention that comes with claiming prizes on behalf of clients who like to keep their anonymity.

“Most of the mail I receive are charity solicitations,” he says. “I don’t look at it as assault. The most intrusive part is paper recycling. I don’t get calls from people asking for some lottery winnings because I think it’s clearly not mine.”

Aside from avoiding scammers, Darling says there are other reasons a lottery winner should seek help from a professional.

“The issue here is making good financial decisions about how to get the award – a lump sum or over time – and at the same time coordinating estate planning,” he says.

If the lucky winner has a large enough estate, Darling says the client may want to consider placing part of the prize in an LLC, partnership or other entity through which shares can be transferred to their loved ones, thus reducing their estate tax liability.

privacy bill

A bill currently working its way through the legislature could put a damper on the representation of lottery winners as a sub-discipline.

In January, Senator Mark C. Montaigne Application No. 194 entitled “The Law on the Protection of the Privacy of Lottery Winners”. In addition to specifying that the identifying information of lottery winners are not public records of the lottery committee, the bill requires that the committee not disclose the identity of the winning ticket holder when the holder submits a written request to the committee.

Montaigne says protecting the privacy of lottery winners should be a legislative priority given the risks posed by the current practice of publicly identifying actual winners unless the prize is claimed through a trust or other entity.

“Not only is someone likely to be defrauded; it is very dangerous,” he tells Attorneys Weekly.

Montaigne’s bill has been referred to the Joint Committee on Consumer Protection and Professional Licensing. The senator has introduced the lottery winner privacy bill in every legislative session since the 2015-2016 session. He hopes that the time has come for the legislature to finally enact his bill.

“This seems to be getting more and more attention because people in Beacon Hill are now more concerned with privacy due to the harmful effects of social media and AI,” Montini says.

Perhaps surprisingly, Young supports the senator’s bill.

“This is an intuitive way to allow clients to get what they want more efficiently without the additional cost of a lawyer and CPA,” Younger says. “To me as a citizen, this bill should pass without a shadow of a doubt, but what happens at Beacon Hill is curious at times.”

Weizmann also has no major objections to the passage of Article 194.

“I read the bill,” Weissman says. “Not bad. You will succeed.”

Wiseman does not see the bill as a threat to her practice, seeing one of her main jobs as assembling a team of professionals to help clients navigate the complexities of their newfound wealth.

“This is (for the client’s) first rodeo – maybe (for the client)” Just It says, “The rodeo.” “This isn’t my first rodeo. And this isn’t the first rodeo for a tax advisor, wealth advisor, insurance agent, and real estate advisor who can help manage this.

Darling doesn’t think passage of the privacy bill will necessarily mean the end of the Massachusetts attorneys’ lottery practice.

“It won’t be necessary, but it will still be necessary to do all the other planning in terms of asset preservation, tax planning, financial planning,” he says.

But the younger one isn’t so sure.

Younger believes that “having the ability to claim anonymously will end the vast majority of lottery claim cases for attorneys.”