The winning numbers flash on the screen, your heart skips a beat, and suddenly you’re worth $100 million. The feeling must be incredible. But once the excitement fades, the big question hits: how do you actually protect all that money?

More money, more problems. So many lottery winners have lost it all. From the start, you have to keep newfound wealth safe from taxes and opportunists, and also develop smart estate planning strategies. 

Building a Team 

Before any spending, and before you even claim the lottery money, you should assemble a trusted team that includes:

  • A California estate planning attorney
  • A financial advisor experienced in high-net-worth management
  • A tax professional or certified public accountant (CPA)
  • Possibly a trustee or private wealth manager

A good team can help navigate the complexities of California tax law, choose the right payout option (lump sum or annuity), and establish the proper legal entities before your name goes public.

Establish a Revocable Trust Before You Claim Winnings

One of the smartest ways to protect lottery winnings in your comprehensive estate plan is to set up a trust before claiming the lottery prize. In California, lottery winners cannot remain completely anonymous, but a properly structured trust can provide a layer of privacy and protection.

A revocable living trust can help manage and distribute funds while avoiding probate after you die. For additional protection, many winners choose an irrevocable trust, which can shield assets from lawsuits and creditors, and help reduce potential estate tax exposure.

You can even name the trust something generic — like “The Pacific Foundation Trust” — so your personal name isn’t immediately tied to the winnings in public records.

How California Taxes Work

California is famous for sunshine, beaches, and unfortunately, some of the highest state income taxes in the country. Lottery winnings are considered ordinary income, meaning both state and federal taxes apply. Depending on the payout, roughly half of your winnings can vanish due to taxes.

Estate planning becomes essential once you realize how taxes can continue to impact your wealth over time. Without a plan, your heirs could face estate tax liability when inheriting your assets, which could shrink their share significantly. A well-structured estate plan can use tools like gifting strategies, charitable trusts, and family limited partnerships to minimize long-term tax burdens and reduce estate tax liability.

California Asset Protection

Sudden wealth can attract attention, and that includes the wrong kind. Once your name appears on the California Lottery’s winners list, phone calls, letters, and even lawsuits may come pouring in to try and poach a lump sum payment.

An estate plan designed to protect lottery winnings can include asset protection trusts and limited liability entities to keep your wealth insulated from potential creditors or frivolous claims. This structure helps ensure that your lottery winnings — and peace of mind — remain intact.

Think Beyond Yourself

Estate planning allows you to decide exactly how a $100 million lottery prize is shared, when it’s distributed, and who’s in charge.

Here are a few tools we often use for high-net-worth Californians:

  • Dynasty trusts to preserve wealth across generations.
  • Charitable remainder trusts for giving back to causes you care about while receiving tax benefits.
  • Education trusts to fund your children’s and grandchildren’s education.
  • Spendthrift provisions to protect heirs who may not yet be ready to handle a large inheritance.

With these trust strategies, your estate plan can become a roadmap for long-term financial security.

Have a Frequent Review With an Estate Planning Attorney

Just like your car, an estate plan needs regular maintenance. Laws change, family dynamics evolve, and your goals may shift. Reviewing your estate plan every few years ensures that your wealth protection strategy stays current with California law and your personal circumstances.

Peace of Mind

How do you protect lottery winnings in your estate plan? It’s about preserving your privacy, protecting your loved ones, and ensuring your windfall becomes a lasting legacy. 

At Best Coast Estate Law, P.C., we specialize in helping Californians navigate complex estate situations, whether you’ve just won the lottery or built your wealth over decades. With the right plan, you can turn that $100 million dream into a secure, sustainable reality.