If you’re lucky enough to have won a prize on a lottery game recently, congratulations! However, you will need to find somewhere reliable to keep your winnings, and maybe even grow it with interest. Finding US banks that handle lottery winners’ money might seem easy at first, but it pays to do a little digging.
You’ll need a bank that:
- Provides security for large sums of money
- Helps you grow your funds if you wish
- Offers specialized support for sudden wealth
It’s easy to assume that once you win a big lottery prize, you can just do with it what you wish. With a little planning, you can – but you’ll need to find a bank that can help you make the most of your windfall. Otherwise, you could see it all disappear as soon as it’s arrived!
In this guide, I take a look at why you might want to set up a lottery winners’ bank account, and which options offer the best support at the time of writing. Skip ahead if you’d like to check out the full list.
Why do I need a specialized bank account for lottery winnings?
While using a “traditional” bank to store and save large winnings and sums of money is perfectly fine, you could get more benefits from a “private” bank.
Private banks offer basic banking services, investment advice, tax planning, estate planning, and high net worth security. Essentially, everyday banks don’t always have the tools or specialist services to manage large amounts of money.
When you work with a private bank, you’ll likely have access to legal and planning support from the best in the business. If you win a large sum on a lottery game, you’ll still need to pay tax – and you’ll also need to make changes to your estate and wills (in case any long-lost relatives appear out of the blue!).
Before all of this, however, you’ll need to decide how you’d like your lottery winnings to pay out, if you get the choice. Typically, you’ll be able to receive lump sums or annuities. Let’s look at both options in turn.
What are lump sum payments?
Nice and simple – you get all your lottery winnings in one lump sum. You tend to get a locked tax rate with these payments, too, meaning you won’t have to worry about changing rates affecting annuities.
Beyond this, lump sum lottery payments are also great if you intend to make large purchases. As you can access all your money in one go, you could start investing in assets such as vehicles and real estate without waiting for annuities to settle.
You’ll also be able to settle up with the IRS one-time only. That’s a huge weight off many lottery winners’ minds – and while it might seem unfair to have to pay a chunk of your winnings to the taxman, you do so within US law!
The biggest drawback to receiving lottery money as a lump sum is that you must discipline yourself. It’s easy to get lost in the melee of spending if you know you have all your funds available.
What’s more, you’ll need to learn how to budget. Unless you choose an account with one of several banks that handle lottery winners’ money, you’ll need to make those winnings stretch. For example, you might want to quit work and retire – but where’s your income coming from when you’ve used all your winnings?
Do also keep a close eye on the wording in any lottery games you enter. Sometimes, the prizes advertised can be higher if you choose annuity payments. Don’t get caught out. And remember to not get caught in superstitions or beliefs, like an itching left hand, when playing the lottery. These are all just games of chance, so treat them accordingly!
What are annuity payments?
Annuity payments are fantastic if you’ve won a large sum and want to spread the income across a long period. For example, most annuity schemes split lottery wins over 30 years. That means you get a nice income boost once a month across 360 payments. Think of annuities like dividends, these streams pay out on a regular basis each month.
Typically, you’ll find the biggest and most interesting lottery prizes are paid out via annuities. That means you might not have much choice if you want to win big!
Many people choose to receive lottery winnings via annuities so they don’t have to budget or worry about running out of cash over the years to come. Certainly, it’s a great way to ensure you still get an income without working!
That said, you’re not getting your full winnings in one go. Without being too morbid, who’s to say what will happen to you in the next 30 years? Many winners just want to access their money now, while they can. Can you blame them?
At least, with careful estate planning, you can ensure any annuities left to pay will go to your next of kin, or whomever you wish to benefit when you pass away.
What’s more, consider the tax angle. Since each monthly payment is taxed on the IRS’ yearly rate, you stand to lose money by splitting your cash up. There’s no guarantee that the rate will go up or down.
What are the best US banks that handle lottery winnings?
Now that you know a little more about how lottery winnings pay out, let’s look at some of the best banks I’ve found that accept such funds in the US. Remember, the details below may be subject to change, so always check with the provider(s) directly if you’re interested and want to know more.
Bank of America
The BoA offers a flagship “Private Bank” service that’s aimed at people with high net worth. The service offers access to direct banking, estate planning, investment advice, sustainable investments, trust setups, and even foundation creation.
BoA also lets you develop private philanthropy schemes so you can carefully manage where you’d like to donate money from your lottery winnings. The Private Bank service also offers art services should you wish to carefully invest in creative assets to build a portfolio (and your wealth).
HSBC Premier Checking
HSBC’s Premier account offers a family-based service that allows you to get priority access to banking without any of the fees. Clients simply need to make regular third-party deposits of at least $5,000, deposit a mortgage loan of at least $500,000, or maintain a balance of $75,000 via deposits or investments.
There’s more fine print to consider, but ultimately, further perks allow you to use money easily while traveling, receive priority customer care, and share access perks with your family.
Union Bank of Switzerland
Despite being based in Europe, the UBS provides wealth management services to US customers. New clients can access support with everyday banking, cash management, investments, securities backing, and more.
The UBS is a world-recognized institution that’s also relied upon by companies and corporations. Through a UBS wealth management account, you can access long-term planning advice, mortgage management, and even education on how to budget large amounts of wealth.
Terms and conditions apply, of course, but UBS is a name that’s synonymous with wealth management, making it one of the best specialized services for lottery winners.
Union Bank previously offered wealth management services to lottery winners and people with high net worth in the US – and now, they’re part of the US Bank group.
However, their customers (and new clients) still have access to UBIS brokerage, checking and savings, IRAs, and card services. US Bank also now processes trusts and any investment accounts previously managed through Union Bank.
The benefits of signing up with US Bank include having access to fantastic insurance services, estate planning, real estate, and alternative investment services, and even business advice. Once again, fine print will apply, meaning I highly recommend you read up on what’s expected of you before you transfer your money.
How to spend your lottery winnings
I get it – when you come into a large sum of money, it’s seriously tempting to want to spend it all at once. However, just how sustainable is that? Not very!
Therefore, consider planning ahead. Start by clearing any debts you may have outstanding, which includes mortgages, student loans, and credit cards.
Beyond debts, really start driving up those savings. Look for high-interest accounts, for example, where you stand to get a healthy return on any wealth you deposit. You might also wish to look for portfolio services where you can grow your money beyond a simple interest rate.
Above all, I seriously recommend you plan for the future – even for the worst. There is no better time to put money aside for as and when you might really need it! Therefore, speak with an estate planner (perhaps via one of the banking solutions established above), and create a “rainy day fund”.
There’s certainly no harm in “splurging” on a dream vacation or a new car – but make sure you lock down your new fortune with a reliable wealth management bank beforehand. Otherwise, your big win might just start slipping through your fingers!