The Wichita Bureau reminds us of what we overlooked in the lottery/tax inquiry:
The real reason an 84 year old takes the lump sum payment is that if she took the ‘annuity’, on her pending demise (what’s her life expectancy, 90?), her estate will have to pay federal estate tax on the present value of the annuity – which can be huge and more than she’s collected in annuity. As it is, she can give away as much as possible (although no where near the whole amount) and what’s left will be available to pay the fed estate tax.
...[A]s it is, the fed taxes the lump sum at about 35% (Florida has a wealth tax but no income tax) - and then lies in wait for the real hit: the estate tax ... .* So the lottery is a real tax break for the feds – who end up in this case with more than the family.And an undocumented extra:
Have you ever wondered what you would do with the net? Say $300 million? At my age, my imagination runs the gamut from A to C ... [A] wheelchair van isn’t terribly sexy or speedy. Hmm, maybe the gamut runs from A to B.---
*Which is not what it used to be. See link, and HT Joel.