March 7, 2012 — -- Louise White, the winner of the third largest Powerball jackpot ever, of Newport, R.I., set up a trust to provide "distance" to her winnings and "avoid complications," her lawyers and financial planner say.
Greg Fater, a friend of the family in Newport and one of her attorneys, said the "number one" reason to create the trust was for privacy because lottery winners in Rhode Island are not permitted to accept their prize anonymously.
All but five states -- Delaware, Kansas, Maryland, North Dakota and Ohio -- have laws that require the lottery to release the name and city of residence to anyone who asks, according to the Multi-State Lottery Association.
White's trust, the Rainbow Sherbert Trust, is named after the ice cream flavor that led her to the grocery store where she bought the winning ticket. Fater said "sherbert" was the spelling of the ice cream at the Stop and Shop in Newport instead of the correct spelling, sherbet.
Danielle Mayoras, estate planning attorney and co-author of the book Trial & Heirs, said the trust would avoid people "coming out of the woodwork to get money from her."
White chose to accept the lump sum payment of $210 million, rather than the 30 annuity payments paid out over 29 years. By choosing the the lump sum, White surrenders the taxes immediately, paying about $52.5 million in federal taxes and $14.7 million in state taxes.
The Whites have remained private since White learned she won on Feb. 11. Fater told ABC News that White called him the day after she learned she won. In the press conference on Monday, White made one short statement and then left the room so her lawyers could answer general questions.
"I want to say that I'm very happy and I'm very proud. This will make my family very happy," she said. "We are truly blessed. Thank you."
White's son, LeRoy, owns a house less than a mile away from the grocery store and was the one who was craving the sherbet. According to public records, LeRoy White's home was purchased for $139,500 in 1997.
LeRoy White is "very well known" in Newport as a musician and "performer-storyteller," according to Betsy Walker, a resident.
Walker, 57, said one of LeRoy's children attended the same school in Newport with her children.
"He would often come and perform and could captivate the room," she said. "He was a great drummer and would always pull the kids up there with him."
Walker said as residents in a small town in a small state, the people of Newport were abuzz with who may have been the winners when the lottery announced last month that the ticket was purchased at the local Stop and Shop. With its bevy of grand beachfront mansions that attract tourists, Walker said many speculated the winner was a vacationer.
"I think people were glad to see it was a nice, local family, instead of the millionaires or turn-of-the-century and robber barons who had their beautiful summer homes," she said.
Fater said the trust is just a "collection vehicle" for the winnings.
"When we do estate planning, we will be turning to other estate planning tools," he said.
Creating trusts for lottery winnings may be more common in states where lottery prize anonymity is permitted. It may also simplify financial matters and prevent legal skirmishes over the money if there is more than one winner for the prize, as with the Powerball jackpot in Connecticut late last year.
In November, three wealth managers in Greenwich won that $254 million jackpot and created a trust to manage the money.
"We wanted to do it to avoid any complications for my client – to make it easier for her. It puts a little distance between her and the claimant, the trust," said Fater. "We were trying to keep her name to the minimum."
"She's a great lady - the salt of the earth. She's very excited and I think she has handled this remarkably as an 81-year-old, an octogenarian. To deal with this with the grace and poise that she has is incredible."
He said he has represented numerous members of White's family for years, some of whom live in Rhode Island.
Daniel Corrigan, a certified public accountant of Corrigan Financial Inc. based in Middletown, R.I. , is her financial planner. Corrigan said the general benefits of a trust are privacy, to control the proceeds and "make sure you have certain people named for continuity purposes."
White has declined to elaborate on her family though she said in a statement, continuing Stop and Shop's spelling of sherbet, "We're excited, very blessed and will determine in the coming months how we'll spend the money, but we know we'll always have rainbow sherbert."