What Happens To Lottery Annuity If You Die

By Milo Cruz
Last Updated: October 3, 2019

Typically, the death of a lottery winner means all future annuity payments will go to their heirs.

It varies depending on the lottery's operator and local state laws, but generally, if a lottery winner dies before receiving all their annuity payments, the remaining portion of the prize goes to the winner's estate.

Usually, the annuity payments simply continue as arranged, but some lottery operators may choose to pay out the remainder of the prize in a single lump sum.

What happens to lottery annuities if the winner dies?

In some states, winners can also designate a beneficiary to inherit the annuity. This is done right at the beginning, before a winner receives their first payment.

If a winner does not have a named beneficiary, the annuity payments will default to their estate and be distributed as according to their will and testament. A court may also intervene should there be no aforementioned will.


Some US states impose federal estate taxes against lottery winnings that are transferred to an heir. In other states, beneficiaries have to pay so-called “death taxes” before they can receive their inheritance. Currently, there are 15 states that have estate tax, and 6 states that have “death tax.” Maryland has both.

Rates also vary, but can sometimes go as high as 40% of your total assets. That's a huge percentage of your money, so if you're a big-time lottery winner and you want to do the best thing for your heirs, it's best to get advice from an expert more familiar with your local laws. Find a tax attorney from your area, or talk to any of the best lottery lawyers you can find.

We also suggest hiring a financial adviser to find the ideal setup for your estate. Doing so can save your heirs a ton of money in taxes and fees.