Can you pass down Powerball annuity?

Winning the lottery is a dream for many people. With jackpots often climbing into the hundreds of millions of dollars, it’s no surprise that people flock to buy Powerball tickets when the prize money gets particularly high. But what happens if you win and later pass away? Can your remaining lottery annuity payments be passed down to your heirs?

How Does Powerball Work?

First, it’s important to understand how Powerball prizes are paid out. When you win the Powerball jackpot, you have two options for collecting your prize:

  • Lump Sum Payment – You receive the entire jackpot amount all at once, minus taxes. The lump sum is typically around half of the advertised jackpot.
  • Annuity Option – You receive your winnings in 30 graduated payments over 29 years. The annual payments increase by 5% each year to help offset inflation.

Around 80-90% of jackpot winners choose the lump sum option. But some opt for the annuity to receive the full advertised amount and ensure long-term income. With the annuity option, your annual payment for the first year would be roughly 5% of the jackpot. Payments then gradually increase over the payment schedule.

Are Powerball Annuities Transferable?

Powerball annuities cannot be sold or transferred like other assets. The annual payments are only made directly to the lottery winner. This prevents winners from collecting the full jackpot amount upfront by selling or transferring away future payments.

According to Powerball’s game rules, the annuity prize is “payable only to an individual, or to a group of individuals (i.e. to a married couple, or partners in a civil union relationship) who purchase the ticket as a group.” Annuities cannot be paid out to a company, corporation, or other entity.

What Happens to Remaining Payments When You Die?

Since Powerball annuities cannot be transferred, what happens to any remaining payments when the lottery winner passes away? The official game rules state that:

“If the payments are being made for the life of an individual, the remaining payments shall be paid to the estate of the decedent.”

This means that your estate or chosen beneficiaries will receive any lottery payments still owed to you after your death. For example, if you elected the annuity but only received 5 annual payments before passing away, the remaining 25 payments would go to your estate.

Do Annuities Continue for Your Heirs?

The short answer is no – Powerball annuities do not continue in their graduated payment schedule for heirs. Any remaining payments are made to the estate, not directly to beneficiaries or heirs. These payments are made on an accelerated schedule.

After the winner’s death, annuity payments will be calculated for the estate as follows:

  • The total of any prize money still owed to the winner is calculated.
  • This total remaining prize amount is paid out in one lump sum to the estate, instead of continuing the annual payment schedule.

In other words, beneficiaries do not get to collect all the scheduled annual payments. Their inheritance is just a one-time, lump sum payment from the estate for the remainder of what was still owed to the deceased jackpot winner.

Are Annuities a Wise Choice?

The fact that Powerball annuities cannot be inherited or transferred in full can make them less appealing compared to the lump sum option. While the annuity offers larger total winnings on paper, most of that extra money comes many years down the road.

Opting for the lump sum allows you to invest the winnings however you want. Beneficiaries would inherit whatever is left of that lump sum. With the annuity, they only receive a one-time payment for what’s still owed – not the total remaining jackpot.

Still, the annuity does provide stable income for life and protects against spending the prize too quickly. But from an estate planning perspective, the lump sum option gives you more control and potentially more to leave behind for your heirs.

Can You Structure an Annuity Through a Trust?

Lottery winners sometimes use trusts to collect their winnings in order to maintain anonymity and control how the money is managed. Unfortunately, lottery annuities cannot be paid out to a trust.

According to Powerball rules, annual annuity payments can only be made to:

  • The individual winner
  • A small group of individuals such as a married couple who jointly purchased the winning ticket

Payments cannot be made to a trust, corporation, or other entity – even one created by the winner. So trusts cannot be utilized to pass down or manage a Powerball annuity.

Taxes on Remaining Annuity Funds

One concern when an annuity passes to an estate is taxes. Any remaining prize money owed to the winner is subject to federal and possibly state estate taxes before being paid to heirs.

Federal estate taxes are owed on estates valued over $12.06 million in 2023. For remaining lottery funds above this threshold, the estate tax rate is a whopping 40%. Some states may also impose their own estate or inheritance tax.

These taxes can take a big bite out of winnings that are accelerated and paid out as a lump sum to the estate. Proper estate planning is critical to minimize taxes and preserve the annuity balance for your chosen beneficiaries.

Key Takeaways

  • Powerball annuities cannot be sold, transferred, or inherited – remaining payments go to the winner’s estate after their death.
  • Beneficiaries do not receive remaining annual payments. The estate gets one lump sum for what was still owed to the winner.
  • Annuities cannot be paid to a trust – even one created by the winner.
  • Taxes can significantly reduce an accelerated annuity lump sum paid to an estate before heirs receive their inheritance.

While annuities provide guaranteed income for life, they limit what beneficiaries inherit compared to the lump sum option. Work with financial and legal advisors to decide the better choice and ensure wise estate planning.

Frequently Asked Questions

Can you leave Powerball annuity payments to your children in your will?

You cannot leave the remaining annuity payments directly to your children or other heirs. If you die with outstanding annual payments still owed, those payments default to your estate. Your estate will receive one lump sum payment for the total amount still owed. After any taxes and estate expenses, the remaining balance can then be left to your children or other beneficiaries through your will.

Do annuities keep paying out after the winner dies?

No, the annuity payments do not continue after the winner’s death. All remaining payments are accelerated into one lump sum made out to the person’s estate. Beneficiaries do not keep receiving annual checks.

Can you assign your future annuity payments to someone else?

No, lottery annuities cannot be assigned or transferred to anyone else. All payments are made directly to the winner. After their death, any remaining payments are accelerated into a lump sum for the estate only.

What happens if a Powerball winner dies without a will?

If a lottery winner with remaining annuity payments dies without a valid will, the balance owed would go to their next of kin according to state law. This is often the surviving spouse and children. Dying without a will means you have no control over who inherits the annuity funds or other assets. A proper will ensures your wishes are followed.

Do annuity payments continue for the beneficiary’s lifetime?

No, lottery annuities do not continue based on a beneficiary’s lifetime. Annuities are solely based on the original winner’s lifetime. If they die, any payments still owed are paid in one lump sum to their estate, regardless of the beneficiary’s age or life expectancy.


Winning a massive Powerball jackpot can be life-changing. But with great fortune comes great responsibility, especially when it comes to estate planning. Opting for the annuity may provide stable income now, but can limit what you leave behind compared to the lump sum. Work closely with financial and legal professionals to make informed decisions and ensure your winnings are handled wisely.

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