Lottery winners can use a blind trust to protect identity
Attorney Justin Markota says a blind trust is a good option when dealing with multiple lottery winners, that way the trustee is the only one to blame for bad investments.
YOUNGSTOWN, Ohio - A recent story on wfmj.com told of a Warren man who won $1 million playing the Powerball.
We couldn't tell you who he was though because the prize was claimed by something called a passive or blind trust. A trust is a way to claim a lottery prize and keep your identity private.
"Blind trusts are a really good idea from the standpoint that the money isn't necessarily traceable to you," said attorney Justin Markota. "A trust, just like a corporation, is a separate legal entity. A blind trust hides who deposited the money in the account. The trustee in that situation, the person who manages the money, really hides the identity of all the beneficiaries that reap the benefits of that money."
Winning big in the lottery can change your life for the better. It can also come with problems and using a blind trust allows you to keep anonymity and not have to worry about family, friends or co-workers begging you for cash.
Markota describes how a blind trust works.
"The winners would make a charitable contribution so to speak into the trust. At that point, all those other people, whether it be an individual or a group, would select a bank or law firm to manage the money and that at point, when it's a blind trust, the beneficiaries, being the people who won, don't have any say in what the trustee does with the money. The trustee can invest the money as how they see fit."
Markota says if you do go the trust route, the most important thing is finding the right trustee.
"Blind trusts are irrevocable, meaning that once you put the money in if you think it's a bad idea, you can't pull the money out. So picking the right trustee is important because it needs to be someone that you believe in, that you're confident in, that can rightly invest the money so when it's time to reap the rewards of what all those lottery winnings have generated, you know that the right guy made the right call," said Markota.
Markota says a blind trust is definitely a good option when dealing with multiple lottery winners. That way the trustee is the only one to blame for bad investments.
The trust can be set up for disbursements to the beneficiaries, but for the most part, Markota says they're best used to invest.
