The Multi-State Lottery Association, which runs the Powerball Lottery, says that there are only five states in which you have the legal right to remain anonymous. So if you don't buy the winning ticket in one of those states, are you out of luck? Read on and find out.
If you want to remain anonymous but didn't purchase the winning ticket in one of those states, you have to leverage strategies and legal entities to help you remain more private when you strike it rich. There are two different strategies that are described in Forbes article entitled "How to Remain Anonymous If You Win The $1.5 Billion Powerball."
(1) Blind Trusts. The term "blind trust" has morphed to include a trust or entity that attempts to hide the true ownership from the public and asset searches. Here you create an entity (a trust or LLC) and name it something other than your name. You have 100% control of the trust, assets, and decisions. It doesn't completely cloak the account, but it can make tying the trust to you more difficult in an asset search.
(2) A Trust within a Trust. High profile lottery winners who want even greater anonymity may consider a trust within a trust structure. It's an advanced strategy that should only be created with a qualified trust attorney. The trust within a trust requires two trusts:
First, create a Claiming Trust. It's called the Claiming Trust because this is the entity that claims the prize. As the winner, you assign the ticket to the trust. This is a short-term trust that simply claims the prize and then distributes the win to the Bridge Trust (see below). The Claiming Trust should have a unique title not related or traceable to you.
Although most revocable trusts use the Social Security Number of the grantor (i.e., you – the person setting up the trust), you want to avoid this because state lottery commissions are state agencies, and their records are subject to the Freedom of Information Act. That makes it easy for a reporter (or anyone else!) to request these documents and trace the Social Security Number back to you.
For greater anonymity, depending on the state lottery commission's rules, you may be able to have a limited liability company (LLC) act as the grantor. In that scenario, the winning lottery ticket would be owned by the LLC, and it would be the grantor of the Claiming Trust. If a reporter gets a hold of the Claiming Trust, they wouldn't see your name—just the name of the LLC. That catch is that some states have requirements when forming an LLC that would identify the name of the person who owns the LLC. So you can see how important it is to work with an attorney who is well versed in the laws of your state.
Second, create a Bridge Trust. In this strategy, the lottery proceeds are paid into the Claiming Trust and then almost immediately transferred into the Bridge Trust. The Claiming Trust helps shield the true identity of the winner and makes it hard to determine the true owner. The details of this trust aren't subject to Freedom of Information Act requests, so your name can be listed as grantor and trustee. However, because the trust name will be listed as beneficiary of the Claiming Trust—and is subject to FOIA requests—don't name the Bridge Trust with personal information.
Reference: Forbes (January 12, 2016) "How to Remain Anonymous If You Win the $1.5 Billion Powerball"