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How to Give Money to Family After Winning the Lottery?

Consider this scenario: You just won the Powerball or the Mega Millions jackpot worth 140 million. That’s more money than you have a financial plan for. Naturally, you have to brace yourself for the life changes that come with your newfound wealth. You will also need to prepare to claim your prize.

When that happens, you will undoubtedly want to share the prize with your family. However, winning the lottery comes with unique legal and financial challenges, particularly when you give your family a piece of the pie. In this article, we will talk about everything you need to know to give money to your family after winning the lottery. But before we proceed, there are special considerations to remember before you share your winnings.

Things to Consider Before You Share Lottery Winnings With Family

If you want to share your lottery winnings with your family, there are a few essential things to consider.

1. Gift Tax

  • When sharing your lottery winnings with friends and family, you’ll need to remember that you need to pay taxes on your gifts. Any person who transfers money or a product to someone else without receiving anything in return is subject to gift taxes. However, these taxes do not apply to gifts below the annual exclusion level. But anything above $17,000 per year will incur gift taxes.
  • The sender – in this case, you – will be responsible for the tax. Gift taxes vary between 20% and 40% of the gift’s value according to the value of the gift. Alternatively, you could also arrange for the receiver to pay it. The only exception to gift taxes are tuition payments, medical expenses, gifts to your spouse, or donations to a political organization.
  • If you want to avoid gift taxes, consider gifting less than $17,000. So before you go on a gifting spree, remember that you will be spending more than you want to give out. 

2. Your family and friends may begin to act differently

  • They say, “Change is the only constant thing.” And when you win the lottery, you may begin to notice changes in your close circle of friends and family. While you are sure those closest to you will support you in whatever you decide to do with your money, you should always be prepared for how people will view you as a lottery winner in the future.
  • You should also be ready to meet new people because more people will try to be close to the latest millionaire in town. Your old friends might also ring you up, trying to reconnect. Also, prepare for family members and friends to become jealous if you do not lavish your winnings on them. We all want to see our friends and family happy, but we can’t give everyone a share of the reward.
  • It can be challenging and stressful to deal with this situation, so here are some ways to reduce the stress. For one, you can claim your winnings anonymously and only tell the people closest to you. You could also hire a financial advisor or lottery lawyer to advise you on how to give money to your family after winning the lottery.

3. Your winnings may run down quickly

  • There is something called the “Lottery Curse.” This is when lottery winners lavish their winnings and return to square one. Many winners have fallen into this curse and had to go back to their former lives. Your winnings can finish if you do not manage it properly. To spend and save wisely, you need the guidance of a financial advisor.
  • Think smart. Your goal might be to give everyone a new house, car, and everything they want. But you may be surprised at how quickly these expenses can deplete your winnings.

4. Marital risks

  • Not to say that your lottery winnings can pose a risk to your marriage. But in the case of a divorce, your lottery winnings may be considered marital property and split between you and your spouse. It may be wise to speak to an asset protection attorney if you are on a course to divorce.
  • Also, consider the relationships of people you want to give money. Family members or friends that you gift money to may someday separate from their partners. The gift you give them might be split if they break up. For instance, if you gift your sister $500,000, it could be turned into $250,000 one day.
  • Gifts can be documented as loans to avoid this difficult problem. You can legally classify your gift as a loan with a loan agreement. By drafting the loan agreement, you can protect the money in case of a divorce.

5. Risks to benefits from the government

  • One thing to consider before gifting money to a family is if they have any financial benefit from the government. Giving huge sums of money may raise their income level, causing them to lose their eligibility for benefits they currently get from the government.
  • Although this depends on the specific program and the money you want to give to them. Government benefit programs have income and asset limits. So there is a chance that your gifts can cause their income and assets to exceed the limit. It is crucial to consult with the appropriate agency that administers the benefits before you give it to them.

How to Split Lottery Winnings With Family

It is only natural that you want to give your family and friends part of your winnings. The table below highlights a few ways to split lottery winnings with your family and friends.

Splitting lottery winnings with family Things to note/ Comments
Physical gifts Whether your dad has been eyeing a new Jeep or your mom wants a new swimming pool in the house, you have the funds to pull them off.
Giving physical gifts is a great way to put smiles on the faces of your loved ones. However, remember that these gifts come with taxes, especially on big purchases.
Cash gifts You can also give them physically or transfer them to their accounts. This allows them to do what they wish with the money for school, loans, or other payments. But remember that these payments will also be subject to taxation depending on the gift size.
Lend money to them Lending your family member money is a great way to support them financially. However, it is crucial to lend with care and establish clear expectations on the terms and conditions of the loan. Remember that loaning your family members may involve signing forms so the IRS recognizes it as a gift.
Joint investment Consider investing or starting a business with your family members using a portion of your winnings. This method allows everyone to share in the winnings and grow the shared wealth. You can do this by investing in bonds, stocks, and trusts. They are great options, especially if you want to create a savings fund for children when they get older.
Schooling and medical expenses You could also pay their fees. The costs of schooling or medical expenses can be overwhelming. Winning the lottery allows you to ease their burden so they can divert their money to things they enjoy.
Pay their debts One of the most beautiful financial gestures a lottery winner can make for their family is to pay off their debts. This would not only relieve them of their financial burden but also relieve associated stress for other family members. It will also improve their overall financial situation.
Offer rent-free living Rent is one of the most troubling monthly expenses for many people worldwide.
You can completely eliminate the burden of paying rent by purchasing a home or rental family and allowing them to live there for free. With this, they will be able to enjoy a better quality of life due to freeing up a substantial amount of their income.
Set up an emergency fund for the family Ideally, you should keep a portion of your winnings in an emergency fund. Sometimes, the best gift you can offer them is peace of mind and security. Emergencies can happen anytime; setting an emergency fund for them is the best way to ensure they can respond well to emergencies.


It is normal to want to take care of your family, and winning the lottery puts you in perfect condition to achieve that. You could fulfill their dreams, set them up for a comfortable life, and help them to live their lives to the fullest. However, you must also be careful so that you do not incur more costs than planned. This will help you to manage your winnings to keep you and your family comfortable for as long as possible.

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How to share lottery winnings with family?

You can share lottery winnings with family by giving them cash gifts directly or transferring them to their bank accounts. You can also do this by buying things for them, lending them cash, and paying their debts.

Can you pass lottery winnings to your family if you die?

Yes, you can pass lottery winnings to your family if your die. You could create a will that dictates how you want your lottery winnings and other assets to be shared. Some lottery organizers also allow you to name beneficiaries that will receive your annuity payments in the event of your debt.

Can you give money away if you win the lottery?

Yes, you can give your friends and family money if you win the lottery. However, you should be aware of gift tasks and the implication of your cash gifts.

Where do I put the money after I win the lottery?

You can put money in the bank or investments after winning the lottery. You could also opt for the annuity payment to receive a steady income stream for several years. We recommend you seek guidance from financial advisors who specialize in wealth management to help you to manage the best places to keep your money.

Which banks can handle lottery winners’ money?

Banks that can handle lottery winners’ money include Wells Fargo, JPMorgan Chase, Citibank, Barclays, and Bank of America. Many national and international plans offer special services to handle lottery winnings. We recommend you compare different banks’ services, fees, and benefits before choosing one.

How much can you give away tax-free if I win the lottery?

You can give cash gifts up to $17,000 tax-free when you win the lottery in the United States. The amount you can give away tax-free depends on your state of the country of residence. Because there are varying rules for different jurisdictions.

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