How to Give Money to Family After Winning the Lottery

Giving your family and friends some of your winnings is rewarding. But read on to make sure you’re doing it right without burning any bridges.

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Adam Moelis
Sep 26, 2022
7 min read

Winning the lottery is an extraordinary feat that is almost impossible. In fact, you’ve got a better chance of being struck by lightning 100 times than you do of winning a Mega Millions jackpot. This is what makes that fame and fortune even more sought after.

And if you win the lottery, you’ll naturally need to prepare for your life to change. Not necessarily because of the large sum you’ve now inherited, but because you’ll need to think about how the people around you are going to start treating you once they find out about your newfound wealth.

While it’s natural to want to give your loved ones a piece of the pie, you want to make sure that no one overeats. Here’s everything you need to know about splitting up your lottery winnings amongst family and friends after you win the jackpot.

What Should You Consider About Sharing Your Wealth?

When you win millions of dollars, it can seem like an infinite amount of money that you can just throw around however you want. But be warned that there are special considerations and stipulations to keep in mind before you share the wealth.

You’ll Need To Pay Gift Taxes

One of the toughest legal challenges you’ll need to remember when sharing your lottery winnings is that you’ll need to pay taxes on your gifts. These are called gift taxes, and they apply to anyone who transfers money or a product to someone else without receiving anything in return.

You don’t need to pay taxes on a small birthday gift to your friend, but you do need to pay taxes on a gift over $15,000 per giver or per recipient. So this law doesn’t apply to most situations – but when you win the lottery, you’ll probably be inclined to help out family and friends by making some larger gifts or purchases.

The donor is generally responsible for paying this tax, but in some cases, you might arrange for the donee to pay the tax instead. Exceptions here are tuition payments, gifts to your spouse, or gifts to a political organization – these do not need to be taxed.

The amount you need to pay on gift tax is dependent on the value of the gift itself, but you can probably expect to pay anywhere from 20% to 40% of the value of the gift if larger than the $15,000 annual exclusion.

So before you buy everyone in your family a brand new Tesla, remember that you’ll be paying a little bit more than you might have bargained for simply due to the gift tax.

Your Family and Friends May Start Acting Differently

Money changes people. And while we’re confident that those nearest and dearest to you are going to be supportive of whatever you decide to do with your money, it’s always good to be prepared for how people will continue to view you as a lottery winner.

Be prepared for old friends to suddenly try to reconnect out of nowhere, hoping to get a slice of the pie. Additionally, be prepared for family members or friends to become jealous if you don’t financially support them.

It’s natural to want to take care of the people in your life, but you can’t give everybody a share of your winnings. Navigating this turmoil can be challenging and stressful, so there are a few ways you can try to alleviate the burden.

For one, be careful who you tell. If you’re in a state where you can remain anonymous, we suggest you do so. Only tell your closest family and friends, and at least wait for the media buzz to die down before you start telling anybody else. Otherwise, your privacy might be at stake.

Additionally, hire a financial advisor who can give you advice on how to divide your cash while still ensuring that you can pay your bills and live your life without losing all of your winnings. And trust us – that happens a bit more often than you might think.

Take care of your closest friends and relatives first. And if you start to feel like the burden of winning the lottery is too much to handle, there are always resources for you to get the help you need.

Your Money Can Dwindle Quickly

It’s hard to imagine the idea of millions (or even billions) of dollars somehow disappearing from your bank account. But believe it or not, many lottery winners actually spend all of their money in a relatively short time and even need to return to their day jobs. 

This is known as “The Lottery Curse” and it has plagued dozens of lottery winners. Money can dwindle quickly if you don’t hire a financial advisor to guide you through smart spending and saving.

This is important to keep in mind if you have your heart in the right place. You might want to give everybody a new house, new car, and everything in between. But remember that many of those expenses might require ongoing monthly payments and taxes that can snip away at your budget even quicker than you might be prepared for.

What Are Some Ways To Give Money to Family and Friends?

There are a few different ways that you can support the people closest to you after you’ve won the lottery.

Physical Gifts

If your best friend’s car broke down and they’re not able to buy a new one, or if your mom has been wanting a new pool in the backyard for years, winning the lottery allows you to show the people in your life that you love and care about them. Giving physical gifts to those closest to you can feel extremely rewarding.

Of course, just remember that you’ll need to pay a gift tax on some of those larger purchases. But depending on how large your winnings are, these might not make much of a dent at all.

Cash Handouts

You can also choose to give your family and friends handouts in the form of cash. You can physically take cash out of the bank to give to your loved ones, or you can transfer funds into their accounts. Just know that these can also be subject to taxation depending on the amount.

This allows your family or friends to do what they please with the money to fund personal expenses. Or, they can use these funds to pay for school, loans, debts, and other monthly payments.

Bonds and Trusts

You might also choose to support your family and friends by putting money into savings bonds or trusts. This can allow for money to be kept safe and secure until those monetary values grow – allowing your friends and family to reap even more benefits.

These are good options, especially if you’re looking to support younger children in your family, as they can access these funds once they grow older. And since most bonds grow with time, they might have access to even more money in the future.


It might sound strange to give a family member or a friend a stake in a stock, but this is actually a very smart way to help out loved ones without worrying about taxation. Stock value changes over time, and if you put $1,000 into a stock for someone today, that same stock might be worth thousands of dollars later.

No tax is due until your family or friend sells the stock. They’d gain whatever they sold the stock for, minus the $1,000 you put into it from the get-go. 

School and Medical Expenses

The cost of student loans or medical expenses can be crippling for some. If you’ve struck it rich from the lottery, you can use your winnings to help fund school and medical expenses for the people in your life so they can use the leftover money for things they enjoy.

What Should You Do After Winning the Lottery?

Before you start sharing your wealth with the people in your life, there are a few steps you’ll want to take immediately after winning the lottery to ensure a smooth process from start to finish.

Take a Deep Breath

You’re going to be excited. You’re going to be ecstatic. But you want to try to keep your composure. Right after you realize you’ve won the winning ticket, you may want to tell everyone you know. However, this can spell disaster if word gets out too quickly. Do not post your ticket on social media or tell anyone outside of your immediate family just yet.

Secure the Ticket

You have anywhere from 90 days to a year to claim your ticket. And while you’ll naturally want to cash it in as soon as possible, the last thing you want to do is lose the ticket between now and then. Sign the back of the ticket so no one else can claim it on your behalf, and secure it in a lockbox until you’re ready to claim.

When you are ready to claim, you can take the ticket to a lottery headquarters in your state, or you can mail it in. We suggest taking the ticket directly to the headquarters for safety and security – as you don’t want to risk your winning ticket getting lost in the mail.

Decide on a Lump Sum or Annuity Payments

When you win a major lottery like the Mega Millions or the Powerball, you’ll have the option to take it as a singular lump sum payment or regular annuity payments over time. While neither one is necessarily better, you’ll want to think through which makes the most sense.

With a lump sum payment, you have access to all of your winnings (minus taxes) right away. This ensures that you can spend every single penny, but that’s also one of the problems. Taking the lump sum means that you might get a little too generous in giving gifts to family and friends, and soon enough, your money will be gone.

With annuity payments, you’ll get regular recurring payments periodically. Commonly, these payments are split up over 30 years, with a regular payment getting deposited once yearly. The major benefit here is that it ensures you won’t spend all of your money at one time. The drawback is that it’s possible you’ll die before you ever get to enjoy all of your winnings.

In Conclusion

Giving money to family and friends after winning the lottery is a rewarding way to share some of your wealth. And while you should support those closest to you with your newfound cash, you’ll want to be careful. Often, you need to pay gift taxes on expensive purchases, and you’ll also need to be prepared for possible turmoil based on who you do and don’t share your wealth with.

You can give people physical gifts, but you can also pay for school expenses, open up savings bonds, or even open up stock. Regardless, your loved ones will be forever grateful for your generosity.

You just want to make sure you’re being responsible with your money so you have some left for yourself. Yotta is a savings account that makes it easy and fun to save your money. We pay out interest in prizes of up to $1 million daily – just by saving. Get started today to see why over 500,000 users are choosing Yotta for spending and saving. 

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