I don’t know why stuff like this keeps me up at night but let’s pretend you just won some obscene amount and there’s a lot of people you’d like to set up for life. Let’s say after taxes you have $300m in your account
You can give someone up to 18k a year without incurring a gift tax and while that’d definitely be a nice bump to their income, you still have way more money than you know what to do with. So what’s the smartest way to hook them up?
A couple of options I’ve considered are:
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Give them a lump sum of $X million. They eat the taxes the first year and handle the savings themselves.
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Create a company and hire them to “work” one hour a month for a big salary. If you put $25m in an account, the interest covers the salary. They get a steady bonus income with the added bonus of getting the best insurance available. Is that legal?
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Set up a “shared” checking account they can use to pay for…whatever. But would these expenses count towards the gift tax? I do not know.
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Buy houses and let them live there rent-free. I don’t really like this one because I don’t want to be a lord to my friends and family.
For the record, I did not win the lottery. I don’t even play it. I’m just working out the details in a fantasy world for some reason
I’ve wondered the same. I previously planned (if i won the big lottery) to set up a $1 million trust with the idea that my work department could take 4% per year to purchase equipment. I returned to work at the end of the summer this week to find that the idiots who are now in charge threw away over $10k worth of stuff that i (and a bunch of school kids) need. Those fuckers aren’t getting shit now and i hope i win just so i can buy my whole team into retirement and leave the fuckers totally fucked!
Back to the topic - i wonder about setting up some type of grant program. Maybe, as you mentioned, paying things for them instead of giving cash? Do you pay tax when you get a home through habitat for humanity? Can i pay for someone else’s health insurance or fill their hsa account? Maybe a scholarship for their kids? Most people i know would be pretty happy to have $18k each year dropped into their retirement accounts.
Did a little research. You want to be in one of the 9 states that doesn’t tax in lottery winnings. Fed will take 24% immediately and you’ll pay the remaining 13% when you file taxes. The $18k gift tax limit is to and from per person. If the giver and recipient are both married, each giver can give each recipient $18k, so $72k per year from one married couple to another. Still trying to figure out the trust situation.