What Happens to Lottery Winnings if You Die Before Payments Are All Paid Out?

If you die before your lottery payments are set to end, your estate would get the rest of it.
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Winning the lottery is a fantasy for people who imagine the wonderful things they could buy with the winnings, the trips they could take and the freedom they could have to never work again. While you want to be able to enjoy your winnings personally, you also want to ensure your family will be taken care of should you die before all those winnings are paid out. If you are entitled to ongoing lottery payments, those payments will continue to either a beneficiary or to your estate after you die.

Annuity vs Cash Option

Lottery winners have two options for payment: cash or annuity. With the cash option, winners receive all their payments up front. This amount will be less than the publicized jackpot amount but equal to the amount available in the jackpot prize pool. Winners who receive their winnings up front can determine how those winnings are distributed upon their death. With the annuity option, winners receive payments over a period of 30 years. The sum of all payments will equal the publicized prize pool. This option allows winners a continuous income source for decades.


Depending on the rules of your state, you may elect to choose a beneficiary to receive the remaining payments of your prize. Unfortunately, most states only allow for one beneficiary to be named, which can pose problems if you have more than one heir you wish to bequeath assets to. Check with the rules of your state lottery commission to review your beneficiary options. If they only allow for one beneficiary to be named and you have multiple heirs, consider forgoing this option in favor of payments made directly to your estate.

Your Estate

If no beneficiary was chosen, your winnings would be sent to your estate for distribution to your heirs. If you have not made final arrangements and don't leave a will, the state will distribute those assets according to the law. Each state has a different way to process estates with and without a will. Consult an estate planning attorney in your area to thoroughly discuss what you need to do to guarantee that your final wishes are carried out.


All lottery winnings are taxed by the state and federal governments. As the winner, you are responsible for filing and paying those taxes. Upon your death, your estate and beneficiaries will be responsible for those taxes. Your beneficiaries also may be responsible for inheritance taxes of up to 40 percent, depending on the total size of your estate. Discuss your estate planning options with a certified financial planner who specializes in inheritance issues.

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