Winning the lottery is something that many of us dream of. But what happens to lottery wins on divorce?
The law surrounding lottery wins and divorce can be complex, and whether a lottery win is shared as part of a financial settlement is largely down to the circumstances of each case.
Do I have to tell my ex that I have won the lottery?
During a divorce, all assets, including lottery wins, must be disclosed. Both parties are entitled to full and frank financial disclosure of the other’s assets, so, even if the winnings are received after separation, they should still be declared.
Do winnings have to be shared?
Unfortunately, there is no definitive answer to this question, and the outcome will be very much dependent on the facts and circumstances of the particular case.
Lottery winnings received during the marriage
It might be assumed that any winnings received during the course of the marriage should be shared between spouses on divorce. However, the landmark case of S v AG provided some useful guidance as to when it might be appropriate for winnings to be retained by the party who won them.
In S v AG, the court stated that where one party to a marriage wins the lottery, and the circumstances were such that both parties acted together in the ticket’s purchase (for example by both being aware of, and in agreement with, the purchasing of the ticket), or the proceeds were invested in joint assets, such as the family home, the winnings are likely to be viewed as matrimonial property, the starting point being that they are shared equally.
Whereas, in circumstances where one party unilaterally bought the ticket using their own income without the knowledge of the other, the court may be more persuaded that the winnings are classed as non-matrimonial property. So, even if the winnings were obtained during the marriage, they can still be classed as non-marital if they are kept a secret, not put into joint property or bank accounts, and not spent on anything related to ‘married life’.
The starting point for non-matrimonial property is that it remains the property of the person who acquired it. However, if the needs of the parties, or any dependent children, cannot be met by the matrimonial assets alone, the court can order that non-matrimonial funds be used to ensure that needs are met.
What about post-separation lottery wins?
If the win took place post-separation, but before a final settlement has been reached, it is likely that the winnings will be classed as non-matrimonial in nature as they were not obtained during the course of the relationship. However, as above, this does not guarantee that they will not be shared to meet needs.
If a party wins the lottery after the divorce has concluded, and the parties have already entered into a ‘clean break’ Consent Order, the non-winning party will not have a claim over the winnings. A Consent Order is a court order setting out the terms of divorced parties’ financial settlement, and once a clean break Consent Order has been entered into and approved by the court, it means that no further claim can be made against a former spouse’s assets.
Can lottery wins be protected?
If a spouse wins the lottery during the course of the marriage and wishes to try and protect this from a potential claim should the marriage later break down, it is advisable to keep any winnings entirely separate from joint property. This is not just limited to keeping money in a separate bank account; it is also advisable not to invest the winnings into any joint assets or put it towards other joint endeavours, such as family holidays or joint cars.
Whilst this is a starting point, as above, keeping winnings separate is not necessarily enough to guarantee that the non-winning spouse will not receive a share of the funds.
Parties could consider entering into a post-nuptial agreement if the lottery is won during the course of the marriage. A post-nuptial agreement is a legal document drawn up between married couples outlining how their assets should be deal with should they later separate. Although post-nuptial agreements are not strictly legally binding in England and Wales, they can carry significant weight with the court when it comes to resolving disputes about finances on divorce, and are becoming more widely accepted as proof of a couple’s intentions.
For confidential, trusted advice about prenuptial agreements, contact Jess Nicholson on jfnicholson@mincoffs.co.uk, or visit our family page.
