Transcript 

Ben Smith:

Welcome, everybody, to The Retirement Success in Maine Podcast. My name is Ben Smith. I am joined by the usual, Abby Doody and Curtis Worcester, the Annie Duke and Edward Thorp to my Doyle Brunson. How are you guys doing today?

Curtis Worcester:

Hey.

Abby Doody:

Good. How are you?

Ben Smith:

Okay. For those that are not inclined to... So Edward Thorp was actually one of the first card counters out there in the casinos. So he was winning money there. Annie Duke and Doyle Brunson are the poker stars. So why I explain that is today, we are talking Powerball. I think the one thing that we see and we hear about is imagining like, "Hey, tomorrow's Powerball drawing has hit $1 billion," right? And that of course starts the water cooler talk and, "Geez, what would you do if you won it? What dreams would you have? What's the first thing you'd spend the money on?" All of those things really start to perk up, right? People get very excited and the idea of winning that money, right? And obviously, the odds are low. It's one in I think 292 million or something is the odds of winning the Powerball.

Ben Smith:

But if you won it, right, you wouldn't have to ever worry about money again, right? Well I know that it might be a little bit more difficult than that, right? And we wanted to talk about, "Hey, if you did win it, what's some good things that you could do? What's some good money management that you might want to think about? What are some things from a legal perspective? What are some things from a tax perspective? What about financial planning? How would you structure it in this case study that we're going to do here today? And how would you think about all that so that the moment that you win the money that you're not being claimed or descended on by vultures, who everybody wants a hefty helping of your winnings," right? And the statistic we see is 70% of lottery winners go broke.

Curtis Worcester:

Mm-hmm (affirmative).

Ben Smith:

And even at a billion dollars, right, that happens. So how do we avoid this term, "The lottery curse victim?" And so that's what we want to talk about a little bit today is thinking about putting together how we do this, how we structure it. And a very extreme example is Powerball. But there's lots of fun exercise I think we're going to go through today. So we assembled two guests today, and we assembled... One was an estate planner who we've talked to before, and we'll get to that in a second. We also are talking to a CPA in the tax side. And then lastly, we'll have Abby, Curtis and myself go through the financial planning and investment considerations of being awarded a large sum of money at once. So with that, our first guest was recently on episode number 39, estate planning mistakes that lead to probate litigation, and helps her clients prepare themselves and loved ones for life events by designing personalized legal documents to carry out their wishes and protect their assets.

Ben Smith:

Our guest is on the Executive Committee for Legal Services for the Elderly in Maine, the Maine Justice Action Group, a member of the Academy of Special Needs Planners and an advisor to the Peaks Island Fund, a Maine Community Foundation fund. She also teaches elder law as an adjunct faculty at University of Maine School of Law. She was a member attorney of the Maine Center for Elder Law, LLC prior to the center merging with Perkins Thompson, P.A. in September 2019. Please welcome Barbara Schlichtman to The Retirement Success in Maine Podcast. So Barbara, well welcome back. We're assuming that some of the listeners to the show in particular, maybe they haven't listened to episode number 39 where we covered estate planning mistakes that lead to probate litigation with yourself. Or maybe in terms of they missed maybe the depth we had on the foundational conversation about estate planning. But we want to always cover some of the basics. So would you just start with some of the brief basics about what is a trust?

Barbara Schlichtman:

Sure. So what is a trust? That's a common question that I get. So I do estate planning and in estate planning, people often will decide if they want a will-based plan, and we know what a will is, and then a trust-based plan. And so a trust, it's an entity or a form of ownership that puts it into the ownership of another entity. A corporation is a good example of the same concept. And people can often understand that when a corporation owns assets, it's not in their individual name, but in the name of the corporation. A trust works the same way. A trust is an entity. And the formation of a trust is fairly simple. It's where I, as the grand tour, give you an actual asset to hold into trust for myself, and I have to identify who the beneficiary of that asset is. So you've got the grantor who creates the trust, a trustee who manages the assets, but does not have any ownership interest, and then a beneficiary who benefits from those assets.

Barbara Schlichtman:

And sometimes, the same person can fill all three roles or you might have different people in all three roles. It really depends on the purpose of the trust. So the purpose of the topic we're going to talk about today, depending on somebody's circumstances, they might have any one of those designs or forms of trust.

Ben Smith:

Yeah. And Barbara, I think that's something where, again, from the topic we're talking today, which is really the idea of sudden wealth, right? So I've won the Powerball and all of a sudden, I've accumulated all of this maybe money or will eventually when I claim the prize. But I think that's why we wanted to have that conversation with you here about, "Hey, estate planning and a trust." So can you talk a little bit about why estate planning is important? And especially in this case, maybe when someone's wealth grows really over time or very suddenly, right? And I think that's something where... Because from our end, I know we covered this in our previous episode. But almost to a T, every client that walks in the door with us and you ask them, "Hey, where's your estate plan?" And they go, "Well, geez, I did that when I was 27 and it was the back of an envelope type thing." And it was really just who's going to take the kids? Well now, it's a different problem in I've accumulated assets. So typically, the answer is no, I don't have an estate plan.

Barbara Schlichtman:

Yeah.

Ben Smith:

And so can you talk about why that's important, but especially in the case of having accumulated wealth or I suddenly got wealth, say, in the case of Powerball lottery winnings?

Barbara Schlichtman:

Great. So this has been a fun topic to think about. And pulling back looking at the big picture, the first thing I need to mention I think it's a great topic because we all hear the news stories about people who have won the lottery. And five years later, they've gone broke, or they've committed suicide, or they've been murdered. So there are all these stories where things have gone really bad. And so it makes you think, "Well why is that," right? You would think if we just had all this money land in our lap, all our problems are solved. Not every day, but many days we hear these news stories where quite the opposite happens. So it triggered me to think about the idea of wealth is it happens in three steps. One is the earning or the obtaining, and then two is saving, which is a habit, and then three is growing your money, the management. And so if you look at that, if somebody has sudden wealth, they've won megabucks, they've won Powerball, they've gotten the big leapfrog on that earning phase.

Barbara Schlichtman:

So they suddenly have all this money. They didn't have to go through the long earning phase. They've gotten it. And so that puts them into, "Well how am I going to save and manage? And then how am I going to grow this money?" And I got on mine and I just looked up all kinds of lottery winners' stories gone bad. And there was a common theme among them. And the reason people had bad experiences for the most part that I saw were substance abuse is one, right, where you're making bad decisions because your addictions are controlling your decisions. Substance abuse, just poor management, poor planning, which we're going to talk about. And then a really big one that ties right into both of those is the inability to say, "No," because you get inundated with requests from family, friends, charities, business opportunities, all these things that come at you and people cannot say, "No," and they're spending money at this incredible rate.

Barbara Schlichtman:

But I think what we really want to look at are what are the control structures? What could protect people from potential substance abuse? What can protect people from predators, or not even predators, but everybody asking for something? And that's where the planning comes in. And so I think that's what we would talk about. What are the ideas for that?

Abby Doody:

Yeah. So just going off exactly what you just said. So say we have won the lottery all of a sudden, why is it so important to surround yourself with fiduciaries, right? And so what is a fiduciary and how can you tell if somebody is a fiduciary or is not a fiduciary?

Barbara Schlichtman:

Right. Okay, good question. A fiduciary is somebody who has a legal duty of care to make decisions that are in your best interest. And this is somebody who if they fail to do that, you would actually have legal recourse against them. So you all know this, even in the financial planning field, there are some financial planners who are legal fiduciaries, and there are some who are not. So that's a good distinction. In my work in estate planning-

Ben Smith:

I'll interrupt for one second, Barbara.

Barbara Schlichtman:

Yeah.

Ben Smith:

So in our role, we are fiduciaries. Just want to... All three of us here, we don't accept commissions. There's no situations with us where we can take that fiduciary hat off and put the suitability interest or suitability standard on for that hat. So I just want to make that point about our roles. And from a legal sense as well, an attorney also has to be a fiduciary as well, right?

Barbara Schlichtman:

Yes. Yeah. And the nice thing that clients can know coming to people like you who are fiduciaries, they don't have to be worried about being put into financial instruments like annuities, just because you're going to earn a commission off of that.

Ben Smith:

Right.

Barbara Schlichtman:

So I strongly encourage people to use people who are legal fiduciaries. So in estate planning, what we do, we appoint fiduciaries in our life. When we appoint an agent under power of attorney, that person is a fiduciary. If we're no longer able to sign checks or pay bills, we've appointed somebody. The personal representative or executor in your will, that's a legal fiduciary to your estate. So in this context of sudden wealth, people are going to be dealing with amounts of money that they are not accustomed to dealing with, and they are going to need good advice and people managing that money. So you're going to want people giving you advice, managing the assets who have a legal duty of care to you, to where if they make poor decisions, you have legal recourse against them. And it's not just that, but if they have that legal liability, it's their profession or their job, or their duty to make appropriate decisions for you.

Curtis Worcester:

So Barbara, I want to rotate to a term that I think we hear frequently when we're talking about this amount of money, and that's generational wealth. We see it I think more commonly. To speak for myself, I see it with professional athletes and they sign these huge multi-hundred million dollar contracts. And I say to myself, "Well their family is fine forever." But I think in this situation of coming into wealth so quickly in a situation like the lottery, I guess what I want to ask you is how can a good estate plan and legal structure really protect that wealth for the, "Everyday person," who comes into wealth and for their family for future generations?

Barbara Schlichtman:

So generational wealth, the planning comes in... It starts with the first generation, right? You accumulate the money, you're managing the money. And there are things you have to plan for. Number one, you have to plan for estate taxes. And there's going to be further information on that. But just to touch on it, when somebody has to pay state taxes, right now, that can be up to close to 40%. So that can take a big chunk out as assets are transferring to the next generation. So you want to plan for that. You also want to plan against poor decision-making and you do that by creating trust and appointing trustees who are fiduciaries to act as gatekeepers to the money. Trust can be designed in a number of ways, and it can be designed that the trust spins X percent of the principal a year, or the trust can only spend money for certain purposes. Or you just have a fiduciary, the trustee who has discretion, but at least you have a gatekeeper.

Barbara Schlichtman:

And I think that's very important, especially because one of the biggest causes of losing sudden gain is the inability to say, "No." You get an independent third party in that role to say, "No." And as I thought about this, even the person winning the assets should set up a trust with a trustee for themselves, because as all of these asks come in and potential investment opportunities and loans, it would give you the flexibility to say, "I would love to help you, but in order to make this sustainable or manage my assets, or whatever, I've set up an independent third party who is managing this. They've got a certain fund, they've got a limited number of assets and I'm just asking that all requests go to that person." And that way, it takes the personal element out of it. You're giving it over to a trustee at a bank or a trust company or an attorney, whoever you select. And so with this generational idea, you have these fiduciaries in place.

Barbara Schlichtman:

First, they can help you generation number one, then you set up the planning for tax planning to help limit tax liability. But in addition to that, to set up asset management for the next generation to where there can be certain benchmarks, and it can also be the next generation can access the money at a certain age, they can access the money upon achieving a certain requirement. And that's how you begin to create generational wealth. And you also can begin to utilize different tax structures and direct where the money goes, have different pots that are subject to different tax rules. And just one more very sophisticated way to plan, but is often used, you can do generation skipping transfers, which is another tax strategy. So it's very important that you get good advice from an accountant and an estate planning attorney to set these structures up.

Ben Smith:

And maybe just to define generational skipping, right? So what you just laid out, Barbara, is, "Hey, if you're transferring money from one generation to the next and you keep getting taxed at 40%, right, on each generation that it gets handed down to." If you skip two, maybe two generations down, say you're 65 and you have grandchildren that are five, then you could skip directly to gifting directly to that generation and avoid that extra layer of taxation, if that's where ultimately you want the money to go, right, is essentially the premise here.

Barbara Schlichtman:

Exactly. And can I just add on that? And it's not that you're entirely skipping that generation because you can set it up that the assets are available in a fund for that skipped generation to use during their lifetime, but they don't have any ownership interest upon life. They can't control where that money goes upon their death. And so you can utilize it, but you can't control where it goes upon your death.

Ben Smith:

Well I want to just tie two things together, because one thing you're saying here is look, one way that generational wealth or instant wealth, how that goes wrong, is this premise that, "Hey, I can't say no to anybody, right, as everybody hits me up and we're talking about this." But really one of the biggest issues too is pre-winning the lottery, the reason why we actually play the lottery or why we're buying the ticket, because it represents infinite possibilities of using money, right? So it's like, "Well I can buy the airplane. I can jet set and see Tom Brady, the Bucs against the Patriots here. And I can be right on the field, right with them," whatever, right? It represents all of it, right? And I think that's something where the reason why we buy it. And I think what that ticket represents is the idea of infinite possibilities with money.

Ben Smith:

And I think the hard part then, the actuality of if somebody does actually win it, is the idea of, "Hey, because it represents so much infinite possibilities," not only to you, the person that won it, but now everybody's looking at you as the source of infinite possibilities for themselves.

Barbara Schlichtman:

Yeah.

Ben Smith:

Right? And in this concept of having legal structures in place. So that allows not only me to say, "No," but allows my money to say, "No." So it really allows for the highest and best use of it with whatever I want to do. And again, as you said, Barbara, is your control of that trust document, right, is you want to set it up so every year, you can go watch the New England Patriots at center field or something. And that's one thing that you do every year, whatever you want to do, you can structure that. But I could see where those two ideas are in conflict, right, is what I want to do pre-buying the ticket is maybe not what happens post-winning that lottery, right?

Barbara Schlichtman:

Mm-hmm (affirmative). Yeah, that's probably true. And I think what you started to touch on, we jumped right in to talking about just getting it to the next generation and planning after you have the money. But I think what you're starting to touch on, it's really important from the very outset how you even receive the money. I think one of the ways to slow the flow of requests for funds would be accepting the money anonymously. And there are ways to do that and that you can start with that, right, with your trust from the outset. And this is not true every state, some states you cannot accept it anonymously in interest, but in Maine, you actually can. So what you can do, so remember we said a trust is an entity? Well rather than me going and accepting the money as Barbara Schlichtman and being in all the media coverage having won the mega bucks, I could create a trust.

Barbara Schlichtman:

I can create a trust that is seaside trust, and I can send my trustee to go and accept the funds for seaside trust. And nobody has to know that I'm the person who created that trust and I won this money. And so it's kept private. And you could start out if it was time sensitive and you needed to do it quickly, because there are deadlines on when you have to respond. In Maine, you actually have up to a year to claim your funds. But you could set up just a simple living trust if you needed to. And what that means, it's a trust that you can continue to amend and shape to be exactly what you want. But you get a basic trust created, get a trustee in place, send that person to accept your funds. And then you don't have to have your name in the headlines and that's going to slow the flow of requests. And you can keep it as private as you choose at that point.

Ben Smith:

So Barbara, I want to ask you about this then, right? So again, I think what you're raising is a really big point is, "Hey, I found out on the news that I got all the numbers and I've won, right? I have it in my hand right now." And by the way, this lottery ticket is a bearer asset, right? So whoever holds the ticket is who actually won the prize. So if I'm walking down the street and I have a hole in my pocket, and that lottery ticket falls out, whoever picks that lottery ticket up and then brings it in, now they've won and I have not. So I could see where there's a lot of concern. I've won, I'm so excited and ecstatic about that possibility that I want to claim it as soon as possible.

Ben Smith:

And what you just said was, "Well pump the brakes there a little bit. If we could maybe set up something from a legal perspective that gives you some anonymity and here is maybe one thing that allows you to." So can you talk about all right, I have this ticket I am in a hurry, right? I need to go claim this right now this very moment. But I go see an attorney and I've listened to this podcast and I hear Barbara telling me I should go set up a trust. Okay. And I'm not trying to pin you down in terms of the exact timeline it can be. But what is the typical timeline to craft a trust, have it be a fully functioning legal entity? Are we talking six months to do it? Are we talking a day? What's the general timeline it takes to do some of that, just even get it in place to accept a lottery ticket in this case?

Barbara Schlichtman:

Yeah, that's a good question. The estate planning process can typically take a couple of months from start to finish. But here's the thing. If somebody calls and they say, "I'm the Megabucks winner, I need to go collect this ticket," they could literally come in and sit down in the office, I clear the morning calendar. If it's feasible, you could sit down and draft a trust and get it signed even in one day. Now, future clients, I don't want, "Oh, everybody's holding me to a one day turn around."

Ben Smith:

Right.

Barbara Schlichtman:

But I'm just talking technically, a trust is literally you get the document in place, the grantor signs it, they appoint a trustee, they name a beneficiary, you fund it with the nominal minimal amount. Today, attorneys often put $10. Historically, attorneys would say that it was funded with a peppercorn. So you'd have to put something in the trust actually for it to exist. But it can be a one day event.

Ben Smith:

So question then, Barbara, is okay, so say I listened to podcast after I've won, after I've claimed, is it problematic for someone to have just claimed the prize personally, and then just assign the prize to the trust?

Barbara Schlichtman:

No. No. I mean you've still got the publicity issue to deal with. But at that point, you could still say, "Well since I've collected my money, I've set up an entity, a trust and I've put somebody else in charge of managing the assets." You can certainly set it up and keep however much you want. But no, you could transfer the money and put it into a trust. Yeah. And let's just touch on this bearer instrument concept for a minute, because in thinking this through, I identified what I think is a little bit of a problem to be aware of if you're a potential Megabucks winner. So if you read the lottery guidelines, they recommend because it is a bearer instrument that when you get your ticket, you sign your name on the back, right? You want to claim that ticket. The problem with that is, I think this is a problem, if you do that well then I don't know that you can set up a trust and have a trustee collect, right? Because you've got your individual name on it.

Barbara Schlichtman:

So then it struck me, maybe the best strategy is, if you're a lottery player, get your tickets, keep them extremely safe, in a lock box or a safe deposit box, and then if you get a winner, then you can put the name of the trustee on that. And then the trustee can go and collect the funds. Now, that's sophisticated lottery play, I understand. But you're asking my opinion. And then if you wanted to go even one step further, you could actually create just an empty trust. A trust is a bucket that holds assets. You can set up my seaside, escape trust and I just have it sitting there waiting for the lottery winnings, and I'd be good to go.

Ben Smith:

That's a very confident play right there. This is going to happen, it's just a matter of when. I guess what I asked Barbara is so if you put the trustee though on that ticket, couldn't the trustee go, "Well that's just because I won it, not because I'm the trustee of the trust?"

Barbara Schlichtman:

No, because...

Ben Smith:

Not because I'm the trustee of the trust.

Barbara Schlichtman:

No, because you'd put their capacity as trustee on there, right. I would put "Ben Smith, trustee", and maybe even the name of my trust. And you would then be my fiduciary. And if you decided to take off to Las Vegas with my winnings, then I have a legal claim against you because you've got this fiduciary duty that you owe me.

Ben Smith:

Got it. Just wanted to make that point.

Barbara Schlichtman:

Yeah, No, that's a really good point.

 

Abby Doody:

So you kind of touched on this earlier, but the publicity issue surrounding lottery winnings, right? So people seem to come out of the woodwork when you win the lottery, right? Whether it's relatives or a coworker that you were with when you bought the ticket and maybe it was their money that bought the ticket. And so you can see how all sorts of issues could arise from this, right? So, are civil lawsuits common against lottery winners? And how can a good legal structure help guard against some of those potential lawsuits?

Barbara Schlichtman:

Good, okay. Yes. So in my preliminary research for this, lawsuits are abundant. And one of the most common that I was seeing is, you know how people put together pools where they put money in? Say in a workplace, and everybody puts in $5 a month and then you buy tickets and then there's a winner. Well, there have been cases where the winner takes it to the store, wins, and then doesn't share the money with the fellow contributors. Those lawsuits, people lose those lawsuits, meaning the person who has taken the money, they typically lose those lawsuits.

Ben Smith:

Right.

Barbara Schlichtman:

What I would suggest for people contributing to those pools, again, I know I'm an attorney and I'm taking it too far in some people's minds, but write it down. Get it in writing that, "Hey, we're all putting in money in this pool. And if there's a winner, the intent is that we are all going to share the pot." Because that's one big source of lawsuit, another source are former exes and former boyfriends and girlfriends.

Barbara Schlichtman:

And so the way to protect one, if you have agreements with people to share funds, you sort of need to honor those. Otherwise what happens is it's just like the money that we currently have. I think it's only protected as much as what we currently have. And there are public policies against being able to set up trusts and hide your money in a trust away from creditors. So if you have legitimate creditors, I'm going to say for we mainstream people who aren't banking off shore, we're typically not going to be able to hide our money from creditors. And that goes for Maine. Well, if you look at the main statutes on lottery winnings, if you owe child support, if you have back taxes, if you have debts to the state, the money will be withheld from your lottery winnings before your money is paid out, so there is that. If there are legitimate claims, you can't hide the money from legitimate claims.

Barbara Schlichtman:

But the other piece of these potential lawsuits, one way to do it if you're married, you equalize the estate, or you put more of the assets into the spouse who's least likely to be sued. You could set up an irrevocable trust, which is another type of trust that would give you creditor protection. With that, you do give up certain rights and claims, but it could protect the money for the family.

Barbara Schlichtman:

So there are ways to do it, but I will say it is hard to keep your money for your own benefit and hide it from creditors or legitimate claims. Unfortunately anybody can file a lawsuit and then you still have to defend it and go through the process. Even if you're going to be the definite winner, you still have to pay an attorney and go through the process. So again, using a trust could keep the money more private, make you less of a lightning rod for these lawsuits. I think that would be a way to look at it. Does that make sense? I touched on a lot of things right there.

Curtis Worcester:

Yeah. No, that was great. I want to rotate again here to the idea of gifting. So I think it's a common thought that if if I won the lottery, I'd think I want to help out my family or relatives or whoever, or charities even, I guess what I want to ask you is kind of what are some things before I consider gifting money of this wealth that I should consider.

Barbara Schlichtman:

Yeah. Yeah. So for the most part, gifting is going to be okay. If it's truly... Let's say these are gifts that you definitely want to make. It's not where you feel like you're taken advantage of. And a lot of times people worry about the tax implications of gifting.

Curtis Worcester:

Yeah.

Barbara Schlichtman:

Right now, that's not that big of a concern for most people. If you win Megabucks, it becomes a concern. We'll just talk about the numbers for a minute, even though that will be covered more in depth later. But right now you can die and leave $11.45 million without paying an estate tax. You can give away $11.45 million without paying a gift tax. Now those laws are changing in 2025, and those numbers will probably drop to around $5 million to $6 million. So if you're one of these big winners, this is going to be a definite concern.

Barbara Schlichtman:

So with gifting, number one, you can make charitable gifts. They're not subject to taxes, so that's a great way to use it. And the idea of gifting is important for the estate planning because we want to get assets that are going to appreciate out of our estate, right, because they're going to keep growing and then you're going to owe more taxes on them. And as important as taxes are to the running of our society, there's nothing wrong with also doing tax planning, because they created laws for this exact reason to support different public policies. So charitable giving is fine.

Barbara Schlichtman:

Gifting on a regular pattern can also be beneficial. Right now we can give away $15,000 per person with no tax consequences. So say you have three grandchildren. You can give each of those grandchildren $15,000 a year without any tax consequences. That's $45,000 a year. You don't have to report it. It doesn't get clawed back into your taxable estate. So those are the kinds of things you could work with an estate planning attorney to identify, "Well, would gifting be appropriate? Who should we give gifts to? What should the gifts go into?"

Barbara Schlichtman:

There are other techniques where you can set up. I've referred to irrevocable trusts. You can also set up, I was thinking about a life insurance trust, but I don't know if we would need that except maybe to cover a state tax planning. People hear about ILITs, an irrevocable life insurance trust. You should talk to your attorney further about that, but that's a trust that if you did need to generate some more money to cover a state tax liability, that's a trust that receives a life insurance policy and you would spend down your money by covering that life insurance premium. It's a little bit sophisticated, but the takeaway is that there is this idea that you can create a life insurance trust to cover estate tax purposes.

Barbara Schlichtman:

But right now you can die with over $11 million, not pay any estate tax. A married couple can pass on over $22 million right now without paying estate tax, but that will change in 2005, 2006. So lifetime gifting in this case it would be very important. If I had a Megabucks winter come in, that's one of the first things I would do is create a gifting plan.

Curtis Worcester:

Yeah. Yeah.

Ben Smith:

Because I think that's kind of what you're getting to, Barbara, is really having all this plan of, "Well, what do I want to do with the money? What's kind of some of the things that are important to me or, say my spouse? And what are our values? What do we want to see happen? How do we want to have influence in terms of future generations?" Maybe none, right? Maybe you hear some families that they want to see a societal good come out of that. And maybe it's all going to be a charitable gift and they don't want to have maybe money influence kids and grandkids and generational behavior, right?

Barbara Schlichtman:

Yeah.

Ben Smith:

So I think all those things of trying to figure those things out, which is I think why the estate planning process is so very important, right. It's figuring out what we want to do, where we want to go, how we want the assets to be moving from point A to point B. And as you said, minimize taxes along the way because it can go to maybe the causes that you want to, that we're more passionate about, whether it be family, charitable, organizational, whatever that might be. I think that's really important. I know Abby, Curtis and I will cover the financial planning end of that and try to talk sustainability. But we wanted to get your thoughts again from the legal angle here today. I thought that this was a really great kind of discussion about kind of some very high level, let's get into lottery and Powerball, and what are some things to know. Any kind of other parting shots here for us, Barbara, about a Powerball or lottery we should consider?

Barbara Schlichtman:

Yeah. I would just say, I mean, I loved the topic because in reading about it, your heart actually does go out to these people who win and then they have these tragic experiences. I'm just going to say there was one where this guy wins the lottery. He goes out for celebratory dinner with family and friends. By the end of the night, he is in the hospital, very sick and dying. It turns out somebody at the celebratory dinner poisoned him with cyanide in hopes of getting the money.

Barbara Schlichtman:

And so I guess that's a very dramatic example, but I think money changes people. And I see this too when people die and people are starting to inherit and money changes people. And so I think the planning is so important. I think to go slow, do it anonymously so you don't have all these external pressures. And set up protections even for yourself because the dramatic change in lifestyle, what I was reading, it really can lead to, If somebody didn't have a substance abuse problem, the change in lifestyle can often lead to a substance abuse problem. So you just can't predict.

Barbara Schlichtman:

So if you can get a trust set up, you get a fiduciary in place to help with your own decision-making and then get a plan in place for charities and giving to the next generation, I think we can avoid these tragic stories that we read about. I just think the planning is so important.

Barbara Schlichtman:

And one other thing that struck me, people need to be realistic about how much they have won because there's a big difference between somebody who wins one and a half million dollars and somebody who wins $65 million. And I say that because if people aren't accustomed to having extra cash and they get one and a half million dollars, they think, "Oh my God, I'm rich." And they go out and buy a house. They start these exotic trips. And this is where you guys will lead into one and a half million dollars does not support that lifestyle.

Curtis Worcester:

Yeah.

Barbara Schlichtman:

So you need to definitely build the financial planning and budgeting into what you won.

Ben Smith:

Well, and I think that's the whole concept here is retirement success, right? It's if I'm 32 years old and I've won $1.5 million in lottery winnings, well it's going to be probably pretty tough to quit my job and to make one or two large purchases and then continue to sustain a certain lifestyle over time. That might not work, but for some people, I think in the financial advisor world, we have this kind of question about defining who's wealthy. The person that has $1.5 million, but spends $1.5 million in two years is not wealthy. The person that lives on social security at 67 and is spending $20,000 a year, lives on $20,000 in social security, but has $150,000 of extra savings, that person's very wealthy.

Barbara Schlichtman:

Yeah.

Ben Smith:

Right, and that's where I think we really kind of define it. It looks really different because I think we assume a certain number, that means that there's going to be a status that goes with that. So I think you're right on, Barbara. And I think this is a great lead into our little round table we'll have about financial planning and trying to get sustainability of that money and what process we would help folks through.

Ben Smith:

So Barbara, really appreciate your time on the topic because again, this is a really important one. Again, it just highlights, takes the yellow highlighter to how we work, right. Regardless of said wealth or accumulative wealth, this is a very similar process. So can't thank you enough for coming back.

Barbara Schlichtman:

Yeah.

Ben Smith:

Being a repeat guest and going through this with us today, appreciate it.

Barbara Schlichtman:

It was fun. Thanks, you guys.

Ben Smith:

Thank you.

Barbara Schlichtman:

Okay, take care.

Ben Smith:

It's really good to hear from Barbara. I think she brought a lot of great points, a lot of expertise, again, especially around the idea of a kind of Powerball and how to legally protect ourselves from maybe ourselves and kind of other areas that we should be concerned of. And we can use use estate planning to do that.

Ben Smith:

So what we want to do is rotate to our next guest and talk a little bit about the tax perspective, right. You win all this money. "What's going on from a tax perspective? What should I know before? What should I know during the year of which I won? What about after?" That's kind of where we wanted to go. So with our second guest, our second guest joined BBSC Certified Public Accountants in 2015 as a senior accountant with seven years of experience in public accounting and is now a principal at the firm. He works with small to medium-sized businesses in a variety of industries, including real estate development, retail companies, service providers and construction companies. He advises on and prepares returns for partnerships, corporations and individuals. He handles the firms' personal property tax programs administered by the state of Maine, the local municipalities, the BETE and BETR programs. He currently serves as a treasurer for Camp Capella in Dedham, Maine and is on the board of Amicus in Bangor, Maine and the Ronald McDonald House Charities of Maine.

Ben Smith:

He lives in Bangor with his wife Nicki, their dog Nana, and their three cats. And in his time off, he enjoys traveling with his wife and friends, as well as campfires in his backyard, game nights and attempting to play golf. At this time, I'd like to welcome Justin Freeman, CPA to the Retirement Success in Maine Podcast. Justin, appreciate you coming on.

Justin Freeman:

No, thanks for having me.

Ben Smith:

Well, thanks for talking today because I know... Again, we're talking lottery, we're talking Powerball, the dream big type thing going on, but those that are kind of thrust in that situation. We wanted to have that conversation, especially from a tax perspective, right, about here's some things maybe prior to claiming the prize, maybe during your claiming the prize and then for years afterwards. How can we just minimize taxes? So that was really what we wanted to tackle with you today. So we really appreciate your expertise, you lending a few moments with us today. So love to just kind of start off with a quick hitting question. So let's just start off with how lottery winnings are taxed. Do lottery and gambling winnings get treated as personal taxable income?

Justin Freeman:

They do. It's added on to your ordinary income just like your wages, just like rents, just like investment income. They'll get added to the bottom line, be part of your adjusted gross income, eventually taxable income and be taxed on your federal 1040 and potentially your state tax returns, depending on which state you live in.

Ben Smith:

And just to define it real quick, right, so then if it's being treated as personal taxable income, so whatever my income tax rate is, right. And obviously, depending on the earnings of those winnings and if it's Powerball, then it probably is very big, but whatever the kind of the tax bracket is for income is going to be treated there. So can you just talk a little bit about how federal and state taxes work with lottery winnings?

Justin Freeman:

Yeah.

Ben Smith:

I guess my question really is around, say I bought a ticket in another state or I did go to Vegas for example, and I got a big jackpot there. How does that work with lottery winnings?

Justin Freeman:

Well, so remember that our system that we have set up in the United States is a progressive tax system. So say you work and you make $80,000 a year and you go off and you win a million dollars in Vegas or you win a million dollars here in Maine, for example, on Megabucks. The million dollars would be added directly on top of your other earnings. So you'd start at a base of $80,000, which on a married filing joint return is taxed in the 12% marginal bracket as your marginal rate. So on top of that, then we're going to add a million dollars of income on top. So we'll go up through the system because we have that progressive structure. So the next $80,000 is going to be taxed at 22%, the next $150,000 is going to be taxed at 24%, 32%, 35%. And then once on a married filing joint you get about $600,000, you're going to be taxed at 37% marginal rate, which is the top rate right now.

Justin Freeman:

Again for the state of Maine, I'm just throwing Maine because that's where I am right now. The top bracket in the state of Maine is 7.15%. So the bulk of your income in that level is going to be taxed at 7.15%. So really for the bulk of anything over a million dollars, really the bulk of your income is going to be taxed at potentially 43%, 44%, depending on the state that you live in.

Ben Smith:

Wow.

Abby Doody:

Interesting. And so when should a lottery winner consult a tax professional, before they cash a ticket, ideally, I'm assuming?

Justin Freeman:

Ideally before, because a lot of the lottery winnings... And I'll be honest. I've never had a Powerball winner. I've had a $500,000 Megabucks winner.

Abby Doody:

Pretty good.

Justin Freeman:

And I've had some game show winners, but a lot of the times what we'll find is they won't withhold necessarily at that top bracket, especially for those larger earnings. They'll withhold at 20%, 10% for federal maybe. And what ends up happening is we have a surprise at the end of the year, unless you do talk with a tax professional and says, "Hold on a second, maybe we need to withhold a little more, or maybe we should make an estimated tax payment of some sort." Because what you don't want is at the end of the day, we all want to make some money. And if we make money, we pay tax. We're happy, that's fine, but we don't want to be surprised. Being surprised on April 15th is never a joy for anyone, the tax preparer, the client. It's never a joy.

Justin Freeman:

So if you don't talk to the tax preparer and before you cash the ticket, at least talk to them quickly afterwards so you don't go splurge all of your money on buying that new yacht or that new airplane or that six castles in Europe. Make sure you save a little bit of it for taxes.

Curtis Worcester:

I want to keep going here, Justin. So I think a big decision that everyone faces as a lottery winner is either, "Do I take the lump sum or do I take the annuity?" From a tax perspective, when would it make sense for someone to take the annuity versus the lump sum or vice versa?

Justin Freeman:

So this is going to sound awful for accountants, but a lot of the time I generally want the economics of the transactions and determine what we do before we look at the taxes. I have people ask me all the time, "Should I buy a car? Should I go do it? Should I buy equipment?" Let the economics speak for itself before we look at the tax. Don't let tax decisions drive the decision making.

Justin Freeman:

And the reason I say that is because at the end of the day, I'm never going to tell the client not to take more money. I'm never going to tell a client to lose money on purpose because taxes, I just said 44%. That's still means you're keeping 56% of the money. So even at the highest bracket, you're keeping the majority of your money. So I'm never going to tell you, "So if you think you can earn more money by taking an upfront payment versus an annuity, regardless over time, maybe I save a little bit of tax by taking that annuity upfront." But over time, I'm going to have more money in my pocket by taking more.

Justin Freeman:

So if I have an investment advisor that says, "Well, the annuity is great." They're giving you 3% or 4% on your money essentially, rather than maybe the investment advisor can earn 7%. I'm to take the 7% all day long.

Curtis Worcester:

I like that.

Ben Smith:

Well, I think that's a really good point, Justin. I like how you said that too, because I think in the client meetings that Abby and Curtis and I have, is I think sometimes we have clients that are so much focused on being tax efficient all the time. I think they're kind of sometimes forgetting that they're on the same team as the government here, right? It's that, "Hey, if you're making more money, yes you're paying more taxes, but you're making more money too." Right? So if you're trying to say, "Hey, I want to minimize my tax rate." Well, that might mean that you're also minimizing your income too and you're not keeping as much. So it just-

Abby Doody:

Yep.

Justin Freeman:

I mean, this extends well beyond Powerball, Megabucks, lottery winnings in general. This extends all the way out to just making basic business decisions. You have a client that comes in at the end of the year. "Hey, should I go buy a truck?" "Do you need the truck? Is it going to help your business? Is it going to improve your business? Is it going to increase your revenues next year? Let's have those conversations before I tell you to go spend $60,000 on a brand new truck, because I get a tax deduction."

Justin Freeman:

Because at the end of the day, and any tax thing, really tax efficiency, tax planning, tax minimization, it's a timing tool. Over time, we're going to get to the same place. I mean, you look at the biggest tax giveaways there are in lifetime exchanges in real estate, Roth IRAs, traditional IRAs. I mean, they're just timing. And yes, maybe we can reduce tax later in life. We put money into a 401k and we're at a lower bracket down the road, but you're still going to take the money out, paying some sort of tax at the end. So at the end of the day, it's all timing. And the same thing could be said about that annuity versus taking the lump sum. So if an advisor says they can do better than what the state can or the gambling commission can, I would take more money before I look at my tax differences there.

Ben Smith:

I like it.

Curtis Worcester:

Yeah.

Ben Smith:

That's some really cool advice. Thanks for that one. Justin, I want to ask another question about, obviously a popular way to play lotteries and especially things when you hear Powerball is at a billion dollars and it gets everybody really excited. And so you hear the concept of the office pool that comes, right? It's like, "All right, everybody in the office, we're all going to put some money in and we're going to buy just a bunch of tickets all as one group." So in those situations, when that actually works, right, how does it work from a tax perspective? Do really the people get taxed differently if one person claims the prize and distributes to the co-workers? Versus, "Hey, we're all coming forward as a group and we're claiming it all as one kind of party in total."

Justin Freeman:

Yeah. So I actually haven't run into this case, but I've read about it a little bit. And what I've read is that if you divvy up the earnings on the lottery winning and it's written down and it's clear that this was purchased by multiple people, then it does make sense to try to divvy up the tax liability across the pool of individuals. The reason being is because of that progressive tax system we talked about. Everybody gets to use that tax structure from zero to $600,000, which is that max bracket. Even if we're talking about $100 million, $10 million, if you have 30 people and we can use that $600,000 buffer before we get to that top bracket, we're going to reduce the tax liability a little bit in that case.

Justin Freeman:

Now like I said, I've just read about that. In some cases, maybe one person has to claim it. I'm not entirely sure on how that's done, but if one person claims it, be careful. Make sure before you divvy up those funds that the tax is taken care of so that one person doesn't get hit with all the tax and the rest of the individuals carry or just get the earnings from it.

Ben Smith:

Gotcha.

Abby Doody:

So since lottery winnings are considered income, as we've been talking about, if I buy a winning ticket in a different state, so we're in Maine, right? So say I buy a ticket in Vermont. Do I pay taxes in my home state or the state where I purchased the ticket?

Justin Freeman:

So I know there's differences among the states. I think Connecticut, for example, I think if you win in Connecticut, I think you get to claim it in your own state. California, I know they really liked their money out there so they'd much rather... Nothing against California, but it's a pretty high tax bracket out there. But I know because I had a Wheel of Fortune winner out there that got taxed in California.

Ben Smith:

Interesting.

Justin Freeman:

But what will end up happening is generally multi-state taxation is a pain in the rear. What ends up happening is a lot of those times, those states may collect tax in that state. And you may owe tax to that state. But what ends up happening is you're only going to pay tax to one state. So in your residency state, you're going to claim all of your income, including those winnings. Your residency state will generally give you what's called a non-resident, or excuse me, a non-resident tax credit, which is going to be taxes paid to other jurisdictions and those will reduce your liability on your home state. So one way or another, you're going to pay it to one of the states. It's going to be a determination of where it goes. Generally, it will be the state that you bought the ticket in, but you're going to get a credit on your state tax too. So you're only going to pay to one state.

Abby Doody:

Interest-

Justin Freeman:

You got a credit on your state tax too, so you're only going to pay to one state.

Abby Doody:

Interesting.

Justin Freeman:

And I think, I haven't run into this case before either, but say you bought in New Hampshire, a no income tax state. Or Tennessee, or Florida or Washington, any of the seven states that don't have income tax. I believe you're still going to probably pay tax at your state level. Because you're not going to have a credit for taxes paid to that other jurisdiction.

Curtis Worcester:

Interesting.

Justin Freeman:

I would expect to one way or another, you're going to be paying that state income tax. And unfortunately, when you are dealing with multi-state taxation, you're probably going to end up paying tax at the higher of the two rates. Because the credit that you get may not offset the credit. Say for California, for example, who might have a 10 or 12% income tax, where Maine only has seven, you're not going to get the credit for that 12%. You're only going to get credit for seven.

Ben Smith:

So, Justin, quick question on that. So we run into sometimes this with clients, they retire and they're looking to get residency in another state, right? To lower their state income tax rate.

Justin Freeman:

Yup.

Ben Smith:

This is just a really off the wall theoretical. So say I won the Powerball in February, could I immediately move to New Hampshire, for example, and then...

Justin Freeman:

Before you claim the ticket would be my guess.

Ben Smith:

Right.

Justin Freeman:

The problem with that, the only reason... The states get very aggressive on who owns the income. It is the only time I have ever seen Maine revenue service criminally prosecute someone, it is when they... And this, it was a very egregious case. They don't like that. The 180 day rule for the state of Maine, or 181 day rule for the state of Maine, the states get very protective on where the money is. And so the state would probably consider you a part year resident until the date you moved.

Ben Smith:

Got you.

Justin Freeman:

So when do you establish residency? When do you move your domicile? Would be the real question. My guess is, you're not going to get away with it.

Curtis Worcester:

Interesting.

Ben Smith:

Not to suggest tax evasion here at all.

Justin Freeman:

But a hundred percent, that's one of it. And you guys know this too in the investment world, is accountants all the time recommend, if somebody's income is entirely based on retirement distributions, social security, investment income. A hundred percent we'll tell the client, they can save 7% of their income just by moving to New Hampshire or Florida or another no tax state. And that's a great way to get an extra investment return.

Justin Freeman:

Yeah. It's guaranteed 7% that you're going to see that you wouldn't have expected before. Who's not going to take seven extra percent?

Curtis Worcester:

Mm-hmm (affirmative) exactly.

Curtis Worcester:

I want to rotate a little bit to an idea of charitable giving. So I think a lot of us think that, if we do win the Powerball, win the Megabucks. I would think that I'd be pretty charitable with the extra money. From a tax perspective, how much can something like charitable giving help reduce the tax bill over time, from a big Megabucks or Powerball winner?

Justin Freeman:

Well, really... I mean when we're talking about numbers this size, million, five million, 10 million. Whatever the number, billion, when you talk about numbers that size, we forget the standard deduction and all that kind of stuff. Those are small numbers at this point.

Curtis Worcester:

Sure.

Justin Freeman:

But if numbers that large, you're really going to get almost a dollar for dollar deduction on your contributions up to 50%, or I think it's 60% now. So the deduction allowed for charitable contributions can't exceed, I believe it's 60% of your adjusted gross income. But you'd have to give that away, anyways, just to get there. So in a lot of cases, you're not going to give that much away, you're going to give a portion away. What you might find a lot of people, and I don't know if you guys handle these a lot, but donor-advised funds and other funds. That may be a good way if you don't want to give an organization $5 million today, but you want to do it over time. Maybe you can use a donor-advised fund to get your charitable contribution in a big year, but still have some control over it to be able to say when it's going to the organizations. That might be an opportunity for someone.

Justin Freeman:

But yeah, charity for an individual that's not a business owner, let's say for someone... What's tough is, and I have this all the time, we have individuals that come in, they have a W2 job, maybe some investment, tax planning for them is difficult. There's not a lot of options out there. We've got our retirement accounts, we've got our health savings accounts, we've got charitable giving. There's a estate planning, potentially if they're large enough to have estate planning. Which may be coming down next year, depending on what the Biden administration looks at for changes there.

Justin Freeman:

But from an individual side, there's just not a ton of opportunities to save a lot of tax. Completely different story with business owners. And I think can cover that a little bit towards the end. Maybe if you're a business owner, there might be some more opportunities available to you. But yeah, charitable giving is probably the biggest opportunity because your retirement contributions are going to be capped at some point, your health savings account is going to be capped at some point. Taking advantage of any of your work programs or dependent care coverage, that kind of stuff, those are going to be capped at some point. So the charity may be the biggest opportunity to save some tax

Ben Smith:

So Justin, in that case then, because again what you just described is charitable deductions really help against adjusted gross income, of which obviously you won. You have all the lottery winnings, right? In that year in which you won the lottery. It feels like that's probably the biggest opportunity, almost right out the get go to do that charitable giving from there.

Justin Freeman:

Assuming your income is going to drop the next year, which we would expect. Yeah, you want to get as many contributions. Heck, if you want to make a lifetime of contributions and use some kind of donor-advised fund or some kind of trust, a charitable trust of some type, that would be the year to take advantage of it. I mean if you said, "I'm going to give away half of it over the course of my life," maybe you can use a charitable remainder trust or something to get that half in immediately, get your deduction for it because you're never going to get, let's assume, you're never going to hop back into that top to crack it again.

Ben Smith:

You might win it again.

Justin Freeman:

If you win a billion dollars, maybe you guys of the investment world could probably turn a pretty good chunk of change on a billion dollar investment. But yeah, that's the year you'd want to take advantage as much as you could.

Ben Smith:

I want to just take a second, Justin. Because I think you're bringing up a really good tool out there that actually the three of us have used with our clients more and more recently, especially this concept of that donor-advised fund. While we like it, a lot of times, if say I want to give away whatever amount of money, right? Let's just kind of use ordinary everyday gift. Say lets, we're going to give a thousand dollars away, is something we want to do. But for whatever reason, maybe we had a really good year in our business, or we had a bonus maybe from work, something like that happens. And maybe one will give more this year, but I don't want to signal to that organization, my church, that nonprofit. "Hey, by the way, I'm giving you five times what I normally give you. I'm going to give you $5,000 this year."

Ben Smith:

Because sometimes the next year you get the... "Well 5,000, by the way, Ben, Abby, and Curtis, that was really great. Thank you for that. But could you do $6,000 this year? And then six or seven?" So the expectation turns up. So what we like about that donor-advised fund is it actually acts as this charitable organization that can hold... You get the immediate deduction for that charitable donation. But then you can give away that money over time. So you can continue to kind of send that out over a period of years, or something along those lines. Which is I think helpful from a... Look I'm in a hurry, I want to give this away. And sometimes organizations, it's a slower process to do something. And this kind of breaks that up and allows you some more flexibility, more thoughtfulness about where you're giving, how you want to give and structuring it. So again, I thought that's a really great point you bought up, Justin. I want to make sure to define that for a second.

Justin Freeman:

And really, if you look at the average everyday American these days. I think last year or two years ago, 94% of Americans were now using the standard deduction. Almost no one is getting any benefit to charitable contributions at this point. And a lot of it has to do with the cap on state income taxes and property taxes and excise taxes at $10,000, without being able to deduct state income taxes past that $10,000. Unless you have a giant mortgage or you're making significant charitable contributions, almost no one's getting benefit for those charitable contributions anymore. Albeit withstanding 2020 when we had the $300 deduction for COVID because of the pandemic. But other than that, if you're going to have this one year that pops, and then you're not going to be able to utilize charitable contributions again for a period of time.

Justin Freeman:

And I'm not talking if you're a billionaire, I'm talking if you won a million dollars or something and you're giving $5,000 away or something every year. Maybe that donor-advised fund is a way to get the contribution deduction in the year that you want it and be able to continue contributing and have that deduction in your pocket.

Ben Smith:

Absolutely.

Curtis Worcester:

Yup

Ben Smith:

So in our previous segment, we had Barbara Schlichtman from Perkins Thompson, talk about a trust, right? That a trust is a really great vehicle to receive Powerball winnings because it can protect privacy, it can help against litigation liability. But also can help with continuity of our money, right? So it's this idea of generational wealth, a trust could hold that and it could just bypass some of the probate process of passing money down from one generation to the other. So from a tax perspective, could you just take a couple of moments and talk about how does a trust receiving those funds help from a tax perspective?

Justin Freeman:

Remember, so when we're talking big numbers here, so let's not look at Megabucks, let's look at a bigger one. We look at a big number here, there's really two taxes that we have to look out for. You've got your income tax structure, and then you've got your estate tax structure. And trusts are going to be huge on the estate tax side of this, and remember a state tax as well, for years we haven't really had to deal with them. We've had a $5 million exemption that went up to an $11 million exemption, that when you're married really turns into a $22 million exemption. We had these huge exemptions, those combination of a those may be going away, or at least the size of those may be going away. But also when you're talking really big numbers, a billion dollars or something, trust may be a way to start getting around some of that estate tax.

Justin Freeman:

And at those really large levels, the estate tax, I think it goes up to 40 plus percent of the assets. That can become really expensive upon the death of an individual that has those assets. All of a sudden we're only getting 48, 45% of the total assets to the beneficiaries. When you count in the 12% of state tax for the state of Maine, 40% for the federal. So there's really an opportunity with trust to avoid that. From an income tax standpoint, there's different types of trusts that are out there. So, I'm not a trust expert by any means, but some of them will pass out the income to the individual that won. That may be something you want to look at.

Justin Freeman:

What you probably don't want to do is leave the income inside the trust to be taxed at the trust level. The trust tax rates go up very quickly, where the highest tax bracket, I think, for an individual starts at 600,000 for married filing joint return. I believe the highest tax bracket in the trust starts at 12,000 or so, maybe a little bit higher than that. So you just want to be careful when you do set up one of these trusts, which really are used for estate tax purposes anonymity. Just be careful of the income side of it as well, because there may be some ramifications there.

Ben Smith:

And Justin, especially when you say... Hey, this concept of winning a Powerball and you win hundreds and hundreds of millions of dollars, is the concept to generational wealth, right? Is almost like these athletes, the LeBron James out there that gets hundreds of millions of dollars of contracts and endorsements. He's working really hard to secure that because he wants not only his kids to be financially secure, but his grandkids and so future and future generations. So what you're saying is if he was really not smart and sound with how he's structuring that money, if he's giving away... No, he's with Los Angeles right now in this moment, so California is you're talking about.

Justin Freeman:

We'll never know where he is, next. Whoever the next winning team is, is going to get him.

Curtis Worcester:

I love it.

Ben Smith:

Yeah. So, but from a state tax perspective... Hey, if he's giving away half of his money just to give it to his kids and then his kids take that. And then they got to give for probate, they got to give away half to their kids. Quickly, you can see where the money is quickly dwindled down and has been given really to the government at that point so...

Justin Freeman:

And that's probably a good reason to use gifting during your lifetime. I mean, if you're married and you have a spouse, you can each give $15,000 each to as many individuals as you want. So if you win a whole bunch of money and you want to take care of your family, just remember me. You can give me up to $30,000 a year, so this advice just cost $30,000 a year to the next hour long dinner. So yeah, I mean, if you and your spouse want to give $30,000 to each of your kids, and then each of your uncles, and each of your grandparents and you can give an unlimited amount of money away through your lifetime just through gifting. And you don't have to file a gift tax return, as long as you keep those amounts under that $15,000 per person. Because that's one way to start moving money out of your estate.

Ben Smith:

Because of the theory of that, right? If I, I ultimately do want to give this to certain people, isn't it better just to... One, gift it while possibly I'm alive. So I can at least see them enjoy it, as one. But two with that is, Hey, isn't it better to minimize or lower my kind of total value. One is, whatever the thresholds are, maybe I want to get underneath that threshold if it is kind of in my personal name. But two is, with that... Hey, be able to kind of give that, better than giving it to the government directly. Right, over time. So again, it kind of there's this philanthropic feeling. This have helped people, I was fortunate and able to help others with it. But also really help myself, right? As I can do something that maybe limits that taxation over time, but also see people enjoy it.

Justin Freeman:

Yup, no question.

Abby Doody:

So, kind of, as a wrap up question. Are there any other tax tips for lessening the tax burden on these big lottery winners over time?

Justin Freeman:

So, sorry I mentioned individuals and individual that has a W2, that's difficult. The year that you win maximize your retirement accounts. As Curtis and I were talking about before just gaming, maximize it. If you're going to be charitable over the next decade, be charitable that year and get as much out of your account as you can. Then, if you're a big gambler, I mean, you can write off gambling winnings against that. So track your... If you have lottery tickets, if you're down at the casino, if you're playing scratch tickets, I mean, just keep those receipts. Because you can take a deduction for gambling losses against gambling winnings. I wouldn't suggest you try to put a million dollars. I mean, unless you're really heavy down into horse racing somewhere on your return.

Justin Freeman:

But if you spend for 500 bucks down at the casino or something, then throw it on there, you'll get a deduction for it. Business owners is a different case. If you're a business owner and you have a business that you actively participate in. You materially, accent the word materially participate in. And you're looking at maybe down the road, you are going to buy that truck, or you are going to buy a big piece of equipment, or maybe you're a contractor and you're looking for an excavator. There is the potential there that if you're looking to... I'm never going to tell you to lose money or spend money unnecessarily. But if you have five years worth of assets that you're going to purchase, that's going to improve your business.

Justin Freeman:

And we can take a big, legitimate, big loss in those years because we're allowed... I mean, right now under the regulations, we're allowed to accelerate the expensing of equipment and vehicles and stuff. There's a way we could have a big loss on your business. Then we could actually have some tax incentives there, because we're taking a big loss in that highest tax bracket. Maybe we're not in that highest tax bracket in the next few years as we're paying those off and utilizing those. So if you're a business owner, there's some more opportunity out there. Maybe you start up a solo 401(k) with a profit sharing plan and you're able to put $60,000 into that as a deduction. I mean, there's opportunities for business owners that a little bit beyond what you would have as an employee.

Ben Smith:

Nice. Well Justin, I think that was also some really great points and I know we want to have that kind of a nice robust conversation. So appreciate you keeping it light too and kind of making sure this is an enjoyable conversation of everybody. Yeah.

Justin Freeman:

Honestly, the taxes will be a small concern if you do win a billion dollars on the Powerball. I'm willing to write that check, I think.

Curtis Worcester:

Yes, me too.

Ben Smith:

Well, thanks so much for coming on our show. We really appreciate the advice and we'll talk to you next time.

Justin Freeman:

That was good, thanks for having me.

Ben Smith:

Thanks, Justin. All right, so we just did obviously Barbara Schlichtman. We're now done Justin Freeman. Again, Justin did a great job. I think covering a lot of what we're asking around lottery winnings and taxes, and how we minimize things and how that all works. I thought was a really good, kind of, rounded explanation he gave us for today.

Ben Smith:

So would love to just kind of go in from the third leg of the stool here, right? Is to talk about estate planning and legal issues. Talking about tax, but maybe the other thing which is kind of our wheelhouse here, right? What about financial planning? What about, what would I do with the money? If I won that much. How would I structure it to make sure it's sustainable? Not only if maybe sustainable for my lifetime, but what about for the next generation and the next generation? And in some of this is trying to figure out, well, what are my goals? What am I trying to accomplish? What do I want to see the money used for? What sort of relationships do I want to have my life? And how does this play into it?

Ben Smith:

Yeah, I think by planning those things out, I think that can lead to more successful outcomes. And I think that's something where... Look, there's less statistics of how a lottery winners are not successful. So that's what we want to do here for this next segment. So Abby and Curtis, myself will walk you through some of those issues there. The first issue we really want to walk through with you today is the big one in terms of you get asked the question right out the gate. I won the Powerball, and are you going to take a lump sum or are you going to take an annuity payment?

Ben Smith:

And just to level set the language here, so annuity payment would be a equal stream of payments over a set period of time, right? So maybe it's a 20 year period where I can say, say it's a billion dollars. Maybe you're receiving something like 50 million a year for 20 years, right? So that's when we say annuity, that's what we're really kind of talking to here is that you don't get all at once you'd get it equal payments over a set period of years or time there. So in regards to, again, lump sum, they give you all at once. Then as Justin described to get taxed on it, you might have a pretty big tax bite out of that lump sum all at once.

Ben Smith:

Usually the lump sum is a little bit more discounted, right? Is it, you don't get all that money when you're getting quoted the billion dollar money. It's usually an annuity is how that's being described there. But some of the concern that just to kind of maybe introduce the concept here, one thing that we've see with, whether it be lottery winners that we've helped over the years, or things we've read about obviously Powerball winners. Is a little bit of an issue around the annuity payment is I think when we received the annuity payment, we kind of almost count all of the money. Like we have all of it today, right? And let's use that example, say we've got a billion dollars and we're going to get 50 million a year. Well, again, 50 million a year is still an ungodly amount of money, right?

Ben Smith:

And you think it would be really difficult to spend, but what you find here is that a lot of lottery winners that we see, especially on the annuity payments, they spend like that they've received the entire amount, right? So they spend maybe it's 80 million in the first year, even when they can only get the 50 million minus taxes, right. So they spend all of it there. And of course they will... Hey, I got more money coming in next year and the year after, I can continue to spend it. Well, I think the problem being when you're spending really outstrips the payments that are coming in, it caused a lot of financial pressure, right? It causes a lot of concern about, maybe bankruptcy, right? As if your creditors really come knocking and you owe $30 million.

Ben Smith:

Yes, you might be getting $50 million next year but the interest on that and the terms of the loans that you agree to could be a big concern there. So again, euphoric winners really, generally end up spending more than their annual payout check and accumulating that insurmountable amounts of debt. That's a lot of what we see for an explanation of why we see some financial challenges and bankruptcies and difficulties as lottery winners. From a lump sum perspective, though, right? You also have the other challenge of... Hey, I received all this money at once. Say I didn't get all the billion, maybe after taxes, maybe I got 300 million. But as Barbara kind of talked to a little bit about is there's a lot of common pitfalls of receiving all that money at once. I assume that first of all, spending. How do I spend that much money?

Ben Smith:

Just spend, spend, spend. But also there's other ideas like investment scams that you're going to get targeted on, right? Is everybody's going to look to find a way to profit from your money. A lot of real estate projects start being engaged with, and I know Abby you talked to real estate with our podcast in the early stages there. But also giving is maybe we're over giving to friends and family. Everybody then goes to the handout. So I think that can be some of the pitfalls there. So I guess what I'll ask from you both is, and I'll wait to hear your answers on and I'll give you mine. Would you, would you choose the annuity payment? Would you choose the lump sum payment? And why? Let's start with Abby.

Abby Doody:

So personally I'll choose the lump sum payment, for a couple of reasons. The first one being, it gives you a little bit more flexibility upfront, right? So you don't have to worry about planning for that money coming. You have it all at once and you can decide your goals that set up, if you want a trust or something like Barbara was talking about, you can do that all at once with the money and it just gives you more flexibility going forward, right? So if you did want to do a big payment on something, you have the money right there without having to go into debt. Like you were talking about Ben, waiting for the other payments to come in. You have it all there and it just gives you some better tools for planning going forward. And also you can invest all of that money at once and hope to see where it goes. So personally, I would choose the lump sum payment.

Ben Smith:

Curtis, what do you think? What would you do if you were in that situation?

Curtis Worcester:

Tough one. I think, I would go annuity here. I think for a couple of reasons, one off the top I think would be kind of spreading out the tax liability there, as Justin talked about. Another I think, so I personally I'm a big budget guy. So I think knowing kind of a schedule going forward. Again, I know it's adjusted and things with inflation, but you have kind of a schedule there of what you're going to receive for the X amount of years. Again, not forgetting about the concerns you express Ben with overspending each year. But I think, I would use the budgetary kind of side of my brain and I think I would choose the annuity there.

Ben Smith:

Yeah. And I'll kind of add, is obviously what we're saying too is we would be doing the math, just like we do a lot of people with pensions, right? As they have this decision. Right is this lump sum at pension, retirement or annuity? There's a math component here, right? What is the terms of the annuity, right? Are they saying there's a certain return they're kind of doing... So what's the break even between the two is some of this, right?

Curtis Worcester:

Yeah.

Ben Smith:

Because you got to look at what the return is that they're saying they can provide versus what you think you can do. And there's a little bit of longevity of yourself, right? And Curtis, I know you're saying the annuity part, somebody that's maybe 92 years old that wins the Powerball. Maybe they go... Geez, a 20 year annuity payment. Hey, maybe I'd rather kind of be able to have access to this money because I don't know how long I'll be around for the next 20 years. So I think those components, I think I probably would... Again, me personally, I think I'd be with what Abby saying here on the lump sum. Again, from the investment perspective also knowing a little bit more...

Ben Smith:

And from the investment perspective, also knowing a little bit more about, hey, there's sometimes a distrust of government. And we've talked about that in this podcast as well. And do I really, again, they always make these annuity payments. It all works. The money's in there from the lottery fund. It all works. But again, there's a level of skepticism of, hey, is that really going to be there? Because I know you promised me this money. If I get it, I know I got it. And I got as much as I could out of that process. So again, I think there's that there. But for me, I think I would probably go the lump sum and then be able to manage it from there.

Abby Doody:

So then that brings up the next big question, which is, how to invest the money? So we all touched on it. It's an enormous amount of money that, all of a sudden, you're tasked with growing or keeping safe, depending on what your goals are for the money. And so investing becomes a pretty important piece of this whole discussion. And so, I think it would be helpful to hear from you both, some of your thoughts around, are there tips or things that people should keep in mind when they're starting to think about investing this money? This is more money than most people have ever had access to. So, making sure that they're taking care of it and using it in ways that they want to is really important. So Curtis, let's start with you. Do you have a couple of tips about what people should think about when they start to think about investing?

Curtis Worcester:

I think, first off, it's important to just take a break. You just won this huge amount of money. Assuming you've never had this much money before, like you're saying, Abby. And it's easy. There are emotions. You're excited. You want to spend it. You want to do this. You want to do that. And I think it's important to just pause, put it somewhere where you know it'll be there. Take a break, six months, a year. Figure out that plan. And just really figure out what you want to do with the money. I think that's probably a good first step.

Abby Doody:

Yeah, I totally agree, because you can imagine the emotions are through the roof, when you just found out you won a billion dollars. And you may not be making the best decisions long-term in those emotional highs. So what about you, Ben? A couple of tips from you?

Ben Smith:

I think the first thing is, again, this is of course, in our field, this topic comes up quite a bit. It's, hey, if somebody won the Powerball, there's always then, how would you invest that portfolio for them? And how would you look at it? There's two ways to look at this. One is an ability to take risk and willingness to take risks. And I think that's the two big questions we look at with every client. Ability wise, by the way, if you win that much money, you can absorb a lot of losses and still be okay. So the more money you have, actually, the more ability you have to take risks, is one of those big things.

Ben Smith:

But from a personality side is, why would I take any risk whatsoever when I've received so much money that I really don't need to take any risk. So, trying to tie those two things together is really important overall. So I would say, first off is figuring those two things out. Because if there's zero willingness, yes, you could go do risky things, but why? You could just go buy, again, when I say the risk-free investment in the investment world is really treasury bills, right, the US government backing a US debt. That's one of the safer investments we see out there. Say, if that interest rate is, again, 2%. Say it's a 2% interest rate, is what you can get on that investment.

Ben Smith:

Well, if you had a $300 million lump sum. Well, getting $6 million every year in interest without ever topping the principal is not that bad of a thing. At the same time is, what are your goals? And I will talk about that a little bit in terms of the dreaming part. But figuring out those goals. And if you do want to grow it for future generations, again, you got to have the ability to take risks because seeing losses, especially at that size, might feel really uncomfortable. And if you're okay with that, and knowing that we're growing for the longterm, I think that's the other part.

Ben Smith:

Another tip I'd say, and we do this in the financial planning end, is separating out your investments into some buckets sometimes. What are the one year spending needs you're going to have? What are the things that you want to do? What about the money that may be here for the kids and for the grandkids and other generations? Maybe that's the money that you could be more aggressive with. What about the things that you might want to fund locally? Maybe you want to be an investor in certain businesses, ala, Shark Tank. Maybe you want to provide different gifts to family members. So I think all of those really preclude in different investment strategies, based on what they want to do. So the bucket thing was the thing I was going to point out. Abby, what do you think for another tip there?

Abby Doody:

Something that I think is really important is finding a financial advisor that you trust and can communicate well with. This is a lot of money. And as Barbara touched on, it could be generational wealth, if you set up trusts in a certain way. So having somebody that you really trust and that doesn't necessarily mean a friend, always. So maybe interviewing a few financial advisors could be really helpful to see their philosophy for managing the money, and working with you, and finding a good fit, because they're going to be a pretty integral part of your team, managing this money going forward. So I would say to just make sure that you really know what you're investing in. Make sure you understand the type of investments that you are getting into and make sure that you've really interviewed and done your due diligence on the financial advisor that you're working with so that you can completely trust them and know that they're looking out your best interest.

Ben Smith:

Yeah. And I'll add to that, Abby. I really like that one because I think sometimes it's, well, who do I know? And where's a friend that's maybe a financial advisor? Barbara really introduced that concept of a fiduciary. And I think that's why we've talked to Barbara. And again, we're fiduciaries. And Justin, again, from a tax professional, again, is a CPA. Here's people with high levels of expertise.

Ben Smith:

I would also say don't hire a friend because I think you do want that professional relationship. You think you want someone that can actually just stand there and go, I don't think that's a really great idea, and here's why. If you don't like them, if you don't want to work with them anymore, then replace them. That's okay. Hey, if it's not working out. Really difficult to do that with a friend, "Hey we're buds. We've helped each other. Aren't you going to help me too? And that complicates that relationship. And with that much money, I think being careful on making sure that everything's a very professional relationship, and that you feel like if a change needed to be made, that you could make it. I think that would be a really important point.

Abby Doody:

Yeah, absolutely.

Curtis Worcester:

So Ben, you teed up where I want to go with this conversation with us. And when you brought up the idea of dreaming, I think a good third point here is, we all played the lottery, or whoever won this billion dollars, played the lottery for a reason. You're dreaming about that trip. Or you want to buy that house or that boat, whatever you got going on. And I think it's important for us to remember, you played it for a reason, you want it. So do it. I mean, within reason, obviously, then taking into account everything we've talked about this far. But if you play the lottery so you can take your family on a great, month long vacation to Florida or Disney World, wherever you're going, do it. Go for it.

Curtis Worcester:

But I think it what the three of us have talked about, it's also important then to, and this is part of that break I talked about earlier, and then you come back and really work on that plan and figure out where you want to invest or how you want to invest, or what else you want to do with the money. So I want to flip it to the two of you. And maybe I'll start with you, Ben. What do you think people should consider as they're realizing these dreams? And I know we've touched on it from a surface point of view here, earlier in the conversation. But I'll turn it over to you there.

Ben Smith:

I think one of the things that we all succumb to a lot is this idea that we all chase money. That money's the thing we're trying to accumulate over time. We're trying to build it. And I think the relationship is that. We're letting the money drive a lot of our life decisions, whether it be your career profession, or your job, or where you live, or all that. And I could see where having that much money all at once is that it's really easy to let that money drive you as well. That all the external pressures of the world start going, start attacking you here about what you should do with the money.

Ben Smith:

And I think it's really hard because, we use the term with our clients, we're not looking for a return on investment. We're looking for return on life. Is that, what does it mean to you to lead a fulfilling life? What does it mean to you? And what are your values? What do you want to accomplish? What's important to you? And how can we use that money in a way to accomplish those things? So I like what you said, Curtis, around building that team around you, and really building that financial round table, which is essentially what we're trying to do here in this podcast. We asked Barbara to the show. We asked Justin Freeman to the show. And going, here's how a round table would work in helping you develop a strategy to make that money work, because 70% of lottery winners go broke.

Ben Smith:

I think when we get there the odds are one in 292 million that we actually got there. We got there. You did it. You beat the odds. And then we're the dog chasing the car. And when the car stops, we don't really know what we're going to do when we catch the car, but we caught it. Exactly. So I think that's the situation here with money. Let's figure out that plan. Let's really get that together. And I think if you lead by values, I think people would have much better outcomes with what they're doing with the money and why, versus I don't know what I'm doing with this money. It feels like too much. I don't want to say no to anybody. So I'm living my values of not being able to say no. And I think that's a really dangerous place to be. So that's what I would say. Abby, what do you think?

Abby Doody:

I would say to definitely make sure you set up a plan. Because I think it's easy to get super overwhelmed by all of these things. So setting up a plan and making sure that you have maybe even controls in place to help you from overspending. Like you talked about, Ben, a lot of lottery winners do end up going broke. And so, making sure that you have controls and people in place that help you resist those things is really important.

Abby Doody:

But I think it's also equally important to take that once in a lifetime trip. You have just won the lottery. And so, what is that big thing that you want to do, and you've always wanted to do with this money? I think it's really important that that's built into your plan. And that just those two things don't necessarily have to go against each other. They can certainly go hand in hand, and should go together. But I think making sure that you are, on some level, also enjoying the money without making it think of too much work. Too much of that can be a bad thing. So enjoying it and taking a little bit of time to enjoy it, I think is equally important, as setting up the plan to make sure, going forward, that money is sustainable so you can do more things that you want to do with it.

Ben Smith:

So Curtis, what would you say, again, back to maybe your dream? If you're going to use your own advice here and take your dream vacation, what would be the thing that you would do, from a dream perspective? You just won the lottery, in one in 292 million odds.

Curtis Worcester:

As someone who doesn't play the lottery, I don't know exactly. This isn't premeditated. So off the top of my head, probably, it would be a trip. I'm a big golfer. So I'd probably want to make a bucket list of golf courses. Big golf courses like the Pebble Beaches, the Augusta National. I don't know if I could do it, but with a billion dollars, it's probably a headstart on where I am now to be able to do it. And overseas, St. Andrew's, where golf started. So I think that would be certainly a key focal point of my dream. Maybe some baseball in there too, try to cross off the bucket list, baseball stadiums too. But yeah, probably from a 10,000 foot view, it would be a trip. It would be a comprehensive long trip, probably around the world, because you got a billion dollars.

Ben Smith:

Abby, what you do? What would be your thought?

Abby Doody:

Well, I would certainly go on a trip. I've always wanted to go to Alaska. Also to Ireland. So those things would be part of it. And then I think I would use it for some of our real estate endeavors that my husband and I have. So we have big dreams for stuff that we're doing on that side. And so, using the money for that, I think would be so fun to kick off some of our dreams that we have from that side.

Curtis Worcester:

What about you, Ben?

Ben Smith:

Well, I guess I would do, I'm a big baseball fan too. So I think my first thought was, I'd like to go follow the Red Sox for a year. Just go with them the whole season. Go from April. Be at most games all the way from April, all the way through. And maybe that would be the year they win the whole thing in the world series. Probably not, in my life. But probably actually I am really lucky at that point, if I've beaten the lottery. It would probably be a good year to do it. But I think probably more globally than that would be, I think, like a trip around the world. I think that would be visiting all the different countries, spending time in different cultures and doing things all across the globe. And I think that would be probably a pretty amazing experience just to kick that off. And especially for your family and your loved ones, do that together would be a pretty cool thing to experience, and get out of the way. So I guess we would call Keri Forbringer and we'd get that all scheduled up.

Ben Smith:

But Abby, you made a really good point there. One of the things that we're going to slip to lastly here was around practical things that we should be doing with our winnings. And you made that point. One of the things that we were first going to say was pay off your debts, right?

Abby Doody:

Yeah.

Ben Smith:

And if you won that Powerball, and if you have whatever debts you have, well, relieve yourself of a financial stress. Relieve yourself of any debts that you have, whether it be credit cards or mortgages, or interest rates, all of that. And again, that would feel like every dollar you pay off is a dollar less you owe. And when you invest it, then it's now only investment that's going to come to you. So I'd say that'd be the first thing from a practical end, I guess, that I would kick off here in terms of this last section. But Curtis, what would be one thing that you would say for practical advice that someone should be doing with winnings?

Curtis Worcester:

Yeah. So I'm going to go back to something I opened with, and that's a budget. I think it's important to, again, go on your trip, do your thing. But when you're really executing this plan, I think it's important to have a budget a part of it. It's easy to spend and keep spending and keep spending. But whether you take the annuity or the lump sum, the goal is for this money to last however long you want it to last. And to do that, a budget's a good way. I think a general tip we talk about is, spend on the interest. If you have it invested, don't touch the principal. Let the interest be your budget. And year to year, the interest comes in, that's your budget. Spend it and do what you want. But just not even that specific, I think it's just important to lay out your limits, and to know your limits. And like Abby was talking about, put something in place so there's a control on your budget. If it has to be a budget by force, do it that way. But I think it's important.

Ben Smith:

Barbara made that point too, right? She said, "Design that trust document. If you put your money in trust, and you set it up so here's what's allowable for you to take money from, and when. And you set up this formal legal arrangement there with the trust." It's another way to maybe be the guardian of yourself in a way. Put up these structures so that maybe if you're tempted, or somebody is attacking, that you have that arms length transaction of, hey, I do have a budget. But also, I have a legal structure, which is saying no to all these other things that, while I would like to say yes to, what I really wanted to start with in terms of what I want to see with the money long-term, it really doesn't fit. So allows you that out. And I think that was really her call. Abby, what's something that you think would be a really good practical thing someone should do with the winnings?

Abby Doody:

Planned charitable gifts? So I think a lot of us probably would have charitable inclinations after winning something as big as the Powerball. And so setting up something like a donor advice fund, which Justin touched on in his segment, is really important. Especially if you do a lump sum payout of the Powerball. You're going to have a pretty big tax liability in that first year that you get all of that money. And the nice advantage of a donor advice fund is you can do a big contribution to it in one year, and then you can plan out where you want to give to charity for years afterwards. So rather than having to make a big decision as to where you want to do all of these charitable contributions at the same time, putting the money in there and then giving yourself some time to think about it, figure out where you want to give, which charities you want to support going forward. It's a really nice way to use that planning. So setting up something like that, I think is a really excellent idea going forward.

Ben Smith:

And also again, the donor advice fund can provide a little more anonymity, right? If that gift comes from you directly, maybe you're signaling to that charity, as we discussed in that last segment, you're signaling that you do have a certain level of wealth, and you're inclined to give money to a certain organization, and you are interested in them. Again, I think there's a level of trade-off here. We want to make sure that we're protecting privacy wherever we can. Where we're also not signaling in an over aggressive way so that you have everybody at that charitable organization that you want to give to is now at your doorstep, and asking for more and more money. So yeah, I think that's a really, really good thing too.

Ben Smith:

And I want to close with an idea here too. And we always, just in my career experience, one of the things that we just talked about, or we helped ask was, how do you define a wealthy person? So, in our groups I've been in, one of the persons said, well, it's a certain level of wealth or a certain level of assets or how it's growing. And actually, I think the answer I liked the best was really how sustainable the money is. So, if I have $50,000 to my name, but I only need maybe $500 a year from it. Well that's something that can sustain for quite a long time. That can keep going forever and ever and ever. If I have a hundred thousand dollars to my name and I'm spending $150,000 a year, that's not wealthy.

Ben Smith:

Same thing with the Powerball. Powerball is really not the idea here, is now we're using this very extreme example. But Powerball is really not a gift of wealth. It is really only a gift of wealth if it's sustainable. And if you spend it all in a year or two, then really, what did you do with the wealth? Doesn't mean you didn't have a great time, didn't mean that you didn't get something out of it. But there is this falsity of, and with our open that we talked about, there's a lottery curse. And I think that's what we're trying to avoid with this episode, was that lottery curse, is what could we put out there that can help people in this situation. But also, it highlights how we work and how we work with the accounting groups and the estate planners out there. Because I think that's really important for those that are looking for help.

Ben Smith:

So we want to thank you for tuning into this one. This was obviously a much longer conversation, multilevels, different segments overall. I appreciate it, staying with us, because this is a new format for us that we hadn't tried before. But if you want more information, we'll have some more information. Again, Barbara mentioned some links. Justin mentioned some things too. So if you go to blog.guidancepointllc.com/45, so that's for episode 45. You can find those resources there. Again, I'm really appreciative for tuning in. And again, a nice little dream episode for us. But we really appreciate you tuning in. Looking forward to hearing from you, if you have any comments or feedback. And we'll catch you next time.