Article on Estate Planning for Texas Lottery Winners

Eduardo Montemayor (J.D. Candidate, Texas Tech University School of Law, May 2015) recently published an article entitled, Winner’s Curse: The Necessity of Estate Planning for Texas Lottery Winners, 7 Est. Plan. & Community Prop. L.J. 363 (Fall 2014). Provided below is an excerpt from the introduction of the article: 

Most people have heard the saying: “You have a better chance of getting struck by lightning than winning the lottery . . . .” In fact, the odds of winning the lottery jackpot prize in Texas are approximately 1:25,827,165 for Lotto Texas and 1:175,223,510 for Texas Powerball, respectively. Because players believe that they are unlikely to win, estate planning concerning the great amount of prize money at stake is usually the furthest thing from the players’ minds; instead, they are focused on the fantasy of how the winnings will solve all their problems. However, without careful estate planning concerning receipt and management of the prize, winners can find themselves worse off than before their “lucky” break.

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Overall, this comment will discuss the factors that would affect estate planning for Texas lottery winners and will make a recommendation as to the best scheme to protect these clients. Within the current estate-planning environment, the article will address certain tools to accomplish general lifetime objectives such as retirement income, income for disability, and ease of estate management in the case of incapacity. This comment will first address how the Texas Lottery works from filling out the ticket itself to collecting the winnings. Next, it will focus on how the recently passed American Taxpayer Relief Act of 2012 affects estate planning for these winners. Then the article will discuss initial preparations before acceptance of the prize. It will then examine the trusts and any tax concerns that winners should consider at the estate planning stage. Finally, the article will make a general recommendation that will optimally protect and preserve the wealth of the winners.