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Admit it, you too have dreamed about winning the lottery. It's OK. Everybody who has purchased a lottery ticket has dreamt about it. Even if you didn't dream about the lottery with a scratch ticket, as a lawyer you probably imagined winning that one big case or getting that golden client. Yeah, that lottery.
Whatever your dreams, it is more realistic than you may think to spend some time thinking about the lottery. Because chances are, you will have a client who wins it one way or another. Some lawyers have actually carved out a practice for such clients.
What to Do With All This Money?
It's a job, but somebody has to do it. Like Laura Kelly, who practices wealth preservation and estate planning at McCarter & English in Newark, New Jersey. In an article for the ABA Journal, she explained that her clients basically need to adjust to their new-found wealth.
"Fortunately, the people I've worked with aren't the ones who go Kardashian on me," she said. "They've been smart enough to take a beat and see how the money would impact their lives. It's like they've said: 'I've got millions of dollars in my account, but what does this really mean? How wealthy am I? Am I this rich?'"
Death and Taxes
For certain, they will need estate planning and tax advice. These are services that not all attorneys can or should provide.
Eido M. Walny, founder of the Walny Legal Group in Milwaukee, said mistakes can jeopardize clients' fortunes. He said one client came to him after another lawyer created big liability problems by changing a revocable trust into an irrevocable trust.
"You can't just take a Volkswagen and put fancy tires on it and race it in the Indy 500," Walny said. "The lawyer created an absolute mess."
Besides addressing estate planning issues, the lottery-winner's lawyer is often charged with finding other ways to maximize the client's benefit. For example, Karen S. Gerstner advises, the client may benefit from receiving the winnings as an entity rather than personally. This may be necessary in states where lotteries are paid to only one winner, even when the winner is a pool of people.
"It is advisable to create an entity because if only one person in the pool claims the prize, when that person distributes shares of the prize to the other members of the group, it could be a taxable gift," she wrote for the ABA's solo, small firm and general practice division. "In addition, only that individual will receive the W-2G, reporting the lottery winnings as 100 percent taxable to him or her for income tax purposes."
So while you dream about winning the lottery, think also about how you will advise your clients when they win.