If I won the lottery, what’s the best way to give my friends money?

In My Humble Opinion
1

The US Powerball lottery routinely gets to huge amounts. It’s presently around $400 million. When it gets like that, I like to get a couple of tickets, if only so I can justifiably daydream about what I’d do with it.

I’ve pretty well mapped out all the selfish stuff (like a tailor made wardrobe, a custom home, and a tricked out RV to travel the country), the investments, and the charitable/business ideas, but with more than $100 million in the bank (even after taxes), I’d eventually get around to wanting to help out some good friends.

There’s a story about how George Clooney, after he made it big, brought a bunch of friends together and gave each one a million dollars. As I understand it, he also covered their taxes.

But is just giving them money the best way to do it?

Could I just hire my friends as “consultants” under a contract that pays them $100,000 a month for the next year? And then anytime I call them to ask a question, they’re earning their salary.

What about having them sign a non-disclosure agreement where they pledge not to tell stories about my past (they are my friends, after all; they know some shit) in exchange for a payment of a million bucks?

Or how about a non-compete agreement.
My buddy - who works as a government lawyer - agrees not to produce any movies in Florida over the next 5 years (my own nascent production company being one of my investments) in exchange for a million?

I’d also like to send a couple million to an ex-girlfriend I did wrong, but I seriously doubt she wants to hear from me. She owns a business that provides a service; could I just pay for a couple of million worth of contracts but not expect performance? What if I sent her a contract that says I’ll pay her the money provided she doesn’t ever communicate with me (something she’s done for well over a decade)?

Would such business arrangements make more sense than just gifting somebody a bunch of money? Are there any advantages or disadvantages?

If I became wealthy overnight from a half a billion dollar Powerball, I’d insist on making things needlessly complicated, but I’m curious if any of these machinations have merit?

2

< throws damper on thread >
Start off by giving some of your new found wealth to some lawyers.

3

I’m a lawyer myself, so that wouldn’t phase me. I’d probably draft the contracts, then go see a lawyer for some reviews and revisions. I like to think I’d have a team of regulars I’d consult. But I’d create shell companies and convoluted management structures (e.g. Moriarty Matters owns the businesses, but it’s a subsidiary of Moriarty Amalgamated, which also owns Moriarty Ventures - an angel investor - and Moriarty Entertainment, a production company), not for any nefarious purposes, but just because I’m now rich and have the time to be eccentric.

4

This is a question I’ve pondered. How does this work without ruining friendships?

“JAQ won the $400M lottery and he didn’t share any! I hate him!”

“JAQ won the $400M lottery and only gave me a million. I hate him!”

“JAQ won the $400M lottery and gave Ted 20 million but me only 10 million. I hate him!”

“JAQ won the $400M lottery and after he gave me $10M he keeps inviting me to fly to Europe on his private jet. What a jerk, waving his money in my face like that. I hate him!”

5

My plan has always been to go to a few select friends and say

“I want you to come up with some business idea - I’ll invest in it (up to some number - maybe a few million, depending on the size of my winnings) and you get to run it and operate it. I’ll also guarantee you a salary of $10,000 a month for the next 10 years to run it.”

(I also anticipate traveling frequently, and going to events, so I’d also be the random friend who calls occasionally and says “Hey I’m going to be in Vegas this weekend catching a Raiders game. I’ve got a suite at the Venetian and $50,000 in chips with your name on it. Why don’t you grab the family and meet me for a long weekend? I’ll book you a first class flight.”)

For family, I’d plan to set up a trust that covers all medical and educational expenses for everybody (I don’t have siblings, but I have cousins; I’d go out to their kids), plus I’d gift everybody up to the maximum gift amount (what is it now? $15,000?) every year the week of Thanksgiving.

And if you’re too ungrateful for any of that? Then fuck off, you’re out! (I’m not actually especially close to my family, so no big loss)

6

Trust funds.
Starting at $1 million each.
Complaints by them, prevent additional deposits by you, to enlarge the funds.
Invested, & paying out 4% annually.

7

That’s along the lines of my plan. Can one create a private mutual fund/ equity trust just for your beneficiaries. Keep a big pool of money together to work for all.

8

If I won 100 million dollars and had at least 50 million after taxes and such I would throw my close friends $100,000 each just because but make it a one time only deal. You can’t make them dependent on it.

9

There are no taxes for them to pay. Gift taxes are assessed against the donor, not the recipient.

10

I always figured I’d ask each of my family members where they want to live, and buy a decent house there. They get a paying job as caretaker, only requiring that the home and property be properly maintained.

11

I would want to do this giveaway completely anonymously. So anonymously, that no-one could ever find out where the money came from even after digging. My benefactors would get a letter and a cheque in the mail, or a deposit to their bank account, from Grey Havens Anonymous Trust, Bay Street, Toronto, with nothing to tie it to me. I mean, I presume that you would start with some kind of trust, but beyond that…?

12

I’ll tell you what, if you win the lottery you yourself will want to collect as anonymously as you can. Hopefully it’s a state that allows you to not be named or to collect via a trust. You do not want to be one of those grinning idiots on TV with the big check.

I know 3 people who hit the lottery. 350K, 1 million, and 8 million. Relatively low amnounts now, but this was in the 80’s. People drove them nuts. Coming out of the woodwork and demanding money as if it were owed to them. One of them actually moved out of state and lived under an assumed name for several years because he was inundated by people wanting money or material items.

13

I think large lottery winners statistically are about 120 times more likely to be murdered at the hands of a family member than average, at least per this reddit thread.

Collect as anonymously as possible, if you’re going to give to family/friends, do it through a trust managed by an attorney. Once you start handing out cash yourself, it often ends badly.

14

I wonder if that is also due to the demographics of who tends to buy more lotto tickets.

15

Or at least who buys more lotto tickets then starts throwing out gifts until they’re suddenly not rich anymore.

I’m no professional financier though I do manage my own pot of invested money. I do buy some lotto tickets sometimes for entertainment, not as an investment plan. I also know that if I did win even a low 8 figures number, I’d be totally in over my head trying to manage it. I’d also know not to give half of it away before I’d even paid the taxes. Unlike some people.

16

We love watching My Lottery Dream House. But my god the winners. David: “How did you come to win?” “Well, I’d already bought my weekly $100 worth of tickets, and didn’t win, then I found another $100 in the seat cushions, so I bought some scratchers, and there it was!”

And: “Are you still playing the lottery?” “Oh yes!”

I know even a minor one MILLION dollar win covers their tickets, but I wonder how much these people spend to win their lottery.

17

I would do something like this. I want a real business that could provide jobs for anyone but my friends could have a nice employment contract like that to do whatever job there that they want. Your plan commits $12million to each person, which will turn out to be substantially more for taxes and benefits, so I’d like the business to be profitable and cover some of those costs.

This would have been a great solution until recently, I and the close friends I’d do this for are retired or soon will be, and not necessarily interested in working at all much less for the next 10 years. I’ll find some way to take care of it, I tend to buy things I don’t need and then just give them away. I might buy a couple of extra boats I don’t need, and maybe a house at the shore I don’t need, and maybe a place up in the mountains that I also won’t need. So I hope my friends can help me get rid of those things.

There is a bar I’d buy so we could keep on hanging out there until we all die.

18

So I’m no tax accountant, but according to this article, you can gift someone up to $11 million over your lifetime, and while there will be paperwork to report the gifts, there’s no taxes involved. And that’s 11 mil per recipient, not cumulative. So go nuts. And remember me as the one who gave you this advice.

19

Alternatively one could offer time in the money booth. Maybe I’d keep one going for the pesky beggars in my life, stock it with just ones and fives. Lol!

20

In my daydream, I get my 3 kids to agree to a fraud - saying we went in on the tickets proportionately - who knows, maybe I paid 55% and each of them 15%… So they just draw a cut off the top - in addition to whatever they will inherit.

WRT my friends - I figure their money is pretty much no good when they are with me. The folk I play music with, I’ve daydreamed about buying them any instrument they want. The guys I golf with would never pay a greens fee or bar bill for the rest of their lives (when I was golfing with them.) I’d imagine taking large groups of family on trips all expenses paid, and taking 3 or 7 guys on golf vacations that were free to them.

But I don’t think I’ve ever really considered just giving my buddies large chunks of cash.