A lottery winner may choose to receive his or her winnings over time (as an annuity) or all at once (in a “lump sum.”) However, if a lottery winner regrets choosing an annuity payout, the annuity payments can probably be sold for a lump sum to a settlement funding company.
We spend about $70 billion a year on lottery tickets in the United States, and every year, about 1,500 people become millionaires by winning a lottery. Lottery winnings issued in the form of an annuity can be transferred back into a lump sum by selling the annuity payments.
However, before lottery winners can sell their annuity payments, the legality of a sale must be verified. Twenty-two states do not permit the sale of lottery payments, although the right lawyer may be able to find a way for you, and most states require a court’s approval for the transaction.
Finding the Right Lottery Payment Buyer
Nevertheless, in twenty-eight states, lottery winners can sell all or part of their annuity payments. The terms and the sale amount can be negotiated. After receiving court approval, a settlement funding company can offer a lottery winner immediate cash for his or her annuity contract.
When you select a company to buy your lottery payments, you should look for professionals with abundant financial experience. Have all of your questions answered and all of your concerns addressed. Don’t accept any offer or sign anything that you don’t fully understand and agree to.
A company that offers to buy your lottery payments will prepare a contract with the details and terms of their offer. If you agree to their details and terms, the buyer will then take the contract to a judge for approval.
If You Win the Lottery
Winners of the lottery have a choice, but choosing payments over time results in more money over time. If you take the upfront lump sum, you’ll receive a smaller total amount of winnings. If you win the lottery, take these steps:
- Sign the ticket and take photos of it, both front and back.
- Determine how much time you have to claim your prize.
- Contact your attorney, or find a trusted investment or estate planning attorney.
- Don’t go spending or quit your job. Keep quiet until your money is safely invested.
Many lottery winners struggle with wealth. Lottery winners are more likely than the average person to be murdered, get divorced, die of a drug overdose, and even file for bankruptcy. If you win, you must make sober and responsible decisions about your future.
How Do You Sell Lottery Winnings?
One of those decisions might be to sell your winnings so that you’re not dealing with scheduled payments for the next twenty or thirty years. The process of selling your lottery winnings is just like selling a structured settlement. To summarize the process:
- A lottery winner receiving payments over time contacts a structured settlement buyer.
- The buyer drafts a contract with the details of the transaction.
- The transaction must have a judge’s approval.
- Taxes will be owed on the lump sum payment at regular federal income tax rates.
For an estimate, or to find out more about selling lottery payments, speak to one of the funding professionals at Universal Funds. We would be honored to assist you.