Callie Rogers, age 16, won $3.1 million in a British lottery. By the age of 22, the unwed mother of two, having attempted suicide twice, and having spent over $400,000 on cocaine alone (in addition to more conventional luxuries), was broke, living with her mother, and working three cleaning jobs. She described her sudden windfall as having ruined her life, and she was looking forward to finding happiness once her winnings were gone.
American Willie Hurt also won $3.1 million, but in the 1989 Michigan Lottery. Two years (and a great deal of crack cocaine) later, he was not only broke, but had lost his marriage and custody of his child, and was facing attempted murder charges.
William “Bud” Post won $16.2 million on the Pennsylvania Lottery in 1988. Within five years of his windfall, he cursed the day it happened. According to the Washington Post, “his problems included a brother who tried to hire a contract murderer to kill him and his sixth wife; a landlady who forced him to give her one-third of the jackpot; and a conviction on an assault charge,” after he had fired a shotgun at a bill collector who came to call at his deteriorating dream home. By the time he died in 2006, Mr. Post had gone from scooping up annual lottery payments of $497,953.47 to scraping by on $450 per month in disability compensation.
Jack Whitaker took only four years to blow through $113,386,407.77 (after taxes) in 2002 West Virginia Lottery winnings. By his own estimate, he gave away $14 million to his church and other charitable causes, but he went from being a well-dressed, successful businessman to being a slovenly strip club patron who didn’t care whether husbands or boyfriends were nearby when he offered women money for sex. His impact on the lives of his loved ones was even more tragic. He started out with the best of intentions but saw the apple of his eye, his granddaughter Brandi, go down the road to drug addiction with several hangers-on in tow, and end up dead under circumstances that pointed to murder.
So what will your loved ones do with what you leave behind for them? You may not have umpteen million dollars to leave behind, but a sudden windfall, no matter how big or how small, can quickly turn from a blessing into a curse. Those who keep these kinds of statistics tell us that the average windfall, whether lottery winning or inheritance, is completely exhausted within 17 months. And that’s an average. Some people abuse their good fortune even faster than 17 months, and only a precious few hold on to it for the long term.
Fortunately, dumping boxes of cash on your beneficiaries is not your only option. Rather than give your loved ones direct access to what you leave behind, you can give them their inheritance in trusts, administered by people or institutions who will provide good judgment and wise guidance.
You can even add a variety of conditions to your gifts. We have had clients who conditioned distributions from trusts upon such things as the beneficiary’s passing a drug test, holding a steady job, or staying out of jail. You can also impose positive conditions, such as directing your trustees to make larger ongoing distributions to beneficiaries who are maintaining a certain grade point average in college or meeting other standards of achievement.
Your legacy deserves to be passed on in a way that your loved ones can receive genuine benefit from it. Sometimes that takes “adult supervision” (even for people who are over the age of 21), and sometimes it takes a little bit of delayed gratification. There’s no harm in being creative about how you achieve that. For some good ideas, you might want to consult your trusted advisors and people who have been on the giving and receiving end of large gifts.
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