I’m a lotto lawyer – here’s the major reason why winners take the lump sum and how to avoid huge estate taxes for family

A LAWYER has advised lottery winners on how to avoid being slammed with taxes and why most opt for the lump sum.

The Floridian lawyer has been dubbed the ‘Lottery Lawyer’ after he represented clients who won $1billion in the Michigan Mega Millions Lottery in 2021.

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Kurt Panouses explained to the Washington Post why it might be better for winners to secure the lump sum of their winnings rather than annual payments for 30 years.

Taxpayers only pay the top tax bracket rate when their income reaches a certain point.

With this in mind, it may be considered the better option to choose 30 years of installments to pay less tax in the long run and therefore have more of the winnings.

However, Panouses warned winners to consider the stability of the tax system over the next three decades before making such a decision.

He said: “The 37 percent you pay now in 2023 is really a low-income tax bracket.”

In his view, the rate will increase over the next 30 years, and the lottery winner would then be paying a higher rate.

“That’s a big reason why a lot of people will take the lump sum all in one year and be done with it,” he said.

Panouses added: “You pay 37 percent and you’re done.”

In another long-term money-saving plan, he also encourages winners to consider their plan for their estate prior to claiming their fortune.

While there are horror stories of lottery winners splurging their newfound cash and losing it all, most people hope to see their fortune last a lifetime.

Panouses warned that unless the money is spent within the winner’s lifetime, even more of the jackpot will be lost to the federal government in the form of inheritance tax.

He explained that if the winner dies with over $12.9million left, around 40 percent of the remaining sum will be given up in estate tax.

In order to stop this from happening, the lawyer advises that winners think about passing it around to family and friends while they are still alive.

He also suggested establishing a trust where the winnings will be stored and having a number of people who are named as beneficiaries who will be given a portion of the money.

While the beneficiaries will have to pay the tax immediately due to the income from their share of the jackpot, they will save on estate tax which would be much larger.

The U.S. Sun has previously covered the transformation of the world’s richest lottery winner.