When a Mega Millions jackpot winner in Maine claimed a staggering $1.35 billion prize, the charmed soul remained unknown to an eager public, possibly even to their friends and family.
How was the winner able to remain anonymous? The person had tapped a limited liability company to claim the prize on their behalf, lottery officials said this week.
That was a smart move, legal experts said, although forming an LLC or trust doesn’t necessarily confer any tax advantages.
“There are a lot of reasons why people want the privacy that is afforded by an intermediary” like an LLC that collects the funds, said Ray D. Madoff, a Boston College Law professor who specializes in philanthropy policy, taxes, property, and estate planning.
“These vehicles on their own tend not to provide any tax advantages,” Madoff said. “It’s really more the anonymity.”
An LLC serves to “shield [the winner’s] information from the public, so you can manage these funds, and it’s all done in the name of one of these entities,” she said.
The person who bought the lucky ticket at Hometown Gas & Grill in the small town of Lebanon claimed the jackpot through LaKoma Island Investments, according to a statement from the Maine State Lottery. The winner chose to receive a lump-sum payment of $723,564,144, before taxes, instead of incremental payments over the next 30 years, the lottery said.
“The winner is thoughtfully considering the best uses of the life-changing prize,” a representative for the windfall recipient said, according to lottery officials. The drawing was on Jan. 13.
Any winner of a sizable jackpot looking to collect their prize through a trust should make three calls as soon as possible, said John A. McBrine, a partner at Nutter McClennen & Fish LLP in Boston who helped a lottery winner in Massachusetts set up a trust last year.
“Talk to an attorney, talk to a financial adviser, and talk to an accountant,” McBrine said.
He said Massachusetts is among the states that allow lottery winners to collect funds through trusts and LLCs, although lottery officials still need to know the winner’s actual name.
“They need a copy of the trust; they need to know who ultimately the beneficiary is,” McBrine said. Officials run the winner’s Social Security number through databases to see if they have any outstanding obligations, such as back taxes or unpaid child support.
The privacy extends to photos of winners posted to the Mass. Lottery website. When winners set up a trust, the named trustee, often a lawyer, can collect the winnings at lottery headquarters in Dorchester and pose for the mandatory photo, according to SKB Law, a firm with offices in Quincy and Hanover that has represented dozens of lottery winners.
“If you win the Lottery, having your identity exposed to the public can wreak havoc in your life,” the firm says on its website. “Relatives, neighbors, friends and friends you never knew you had will suddenly descend upon you seeking favors.”
Or they might start scamming in your name.
That’s what happened to Mavis Wanczyk, the Chicopee woman who won a $758 million Powerball jackpot in 2017. Within days of her win being announced, police began warning the public that scammers had set up social media accounts impersonating her and offering people cash in exchange for personal information.
Disputes over the public identification of winners have gone to court. In a closely watched case in New Hampshire, Hillsborough County Superior Court Judge Charles S. Temple ruled in 2018 that a woman who won a $560 million Powerball jackpot could keep her name confidential but that her hometown could be disclosed.
The woman, identified as Jane Doe in court papers, bought the winning ticket on Jan. 6, 2018, in Merrimack, N.H., and weeks later sued the New Hampshire Lottery Commission for the right to remain anonymous.
According to her complaint, she visited the commission’s website after learning she won and followed the agency’s instructions for redeeming her prize, signing the back of the ticket and printing her address and phone number on it.
But after speaking with a lawyer, she realized she could have maintained her privacy if a trustee had signed the ticket instead.
Privacy isn’t the only advantage to creating a trust, according to Baker Law Group P.C., a Massachusetts firm. Its website says an attorney can also “recommend a financial planner who can help you determine how to handle taxes, gifts, and charitable donations.”
The back of the ticket, the firm says, should be signed in the name of the trust.
“If you must sign it before the trust is created, sign it small so you can leave space to add trustees and the name of the trust you’ll establish,” the site says.
Material from prior Globe stories was used in this report.
Travis Andersen can be reached at firstname.lastname@example.org.