Winning a lottery especially hitting a big jackpot is a dream come true. The huge prize money is enough to give wings to all your dreams. You can buy things you always wanted, a holiday with your family at dream destinations and more. In fact, it can give you financial freedom for life if you manage your money properly and intelligently.
But, often this question troubles the person – ‘What will happen to my winning amount if I die? Will my beneficiary get the money?’ The jackpots are getting bigger and with online lottery portals like Lottoland opening new areas giving access to people to play any lottery they want, the question becomes all the more relevant. People would want the money to be passed on to their beneficiaries after their death and not to the government.
Lottery Winnings Are Estate Assets
There is no need to be worried about the winnings in case of winner’s death. Lottery winnings are considered to be estate assets and the governments don’t keep the money with them. They pass it to the winner’s heirs. Only if the deceased winner has made no will and dies intestate, then the money decision is left to the whim of their state’s intestate estate laws. In case no next of kin comes to claim the money or cannot be found, the money is claimed by the government.
Annuity vs. Lump Sum Option
Some lotteries offer their jackpot winners to opt for either lump sum payment or annuity. The question of the death of the winner has more role to play in the annuity payments because the payments are made for up to 30 years, which is a long time and the winner might die. In lump sum payments, there is not much problem because the winner already claims the entire amount and can make a will on how they want to distribute it in case of their death. In the absence of a will, how the money will be distributed after the death of the winner depends on the rules of the state. It generally goes to the legal heir.
Some lotteries allow the winner to choose a beneficiary. The main problem in this is that most states allow you to name only one beneficiary. Thus, if you want to divide your money among more than one heir, it poses a problem.
It is recommended that you check the rules of the particular state lottery commission and then make your decision. If you find that it allows naming only one beneficiary when you have more, then it’s better to get the payments made to your estate from where it can be distributed among your heirs as specified in the will. It is very important to make a will; otherwise, the state will distribute the winnings according to the law prevailing in that state.
As all states have different rules and regulations on it, it’s better to get in touch with a certified financial planner to sort it out properly and legally.