The joy of winning the lottery can quickly diminish when divorce is factored in. But is a lottery win automatically included in the matrimonial pot? And can you wait until the divorce is finalised before cashing in to avoid having to share it with your spouse? Read on for answers.
The joy of winning the lottery can quickly diminish when divorce is factored in. But is a lottery win automatically included in the matrimonial pot? And can you wait until the divorce is finalised before cashing in to avoid having to share it with your spouse? Read on for answers.
If you have a family issue and you require legal advice to understand your options, contact specialist family law solicitor Rebecca Calden-Storr of Stowe Family Law. With over 20 years’ experience, she is regularly instructed on matters arising from relationship breakdown, including divorce, financial disputes, complex assets, and disputes relating to children.
Winning the lottery before divorce
When divorcing, all assets owned by a couple must be disclosed and considered. This includes lottery winnings, even if won by only one party. In a 2011 case, before marrying, the wife bought a lottery ticket from her own earnings and without the other party’s knowledge, keeping the winnings secret. The court upheld the principle that if the winnings were not used as part of marital life, and had been kept separate from matrimonial finances, they did not become part of the pot.
But this does not necessarily mean that winnings obtained by one party without the other knowing can never become matrimonial property. In the same case, the wife actually used some of the winnings to buy a house in which both parties lived prior to the divorce. In doing so, the winnings she’d used became part of the couple’s matrimonial wealth, and the court found that the money tied up in the family home did indeed fall within the sharing principle.
The court has wide discretion to make property adjustments in order to achieve a fair settlement, especially when it comes to meeting the needs requirement. If you win the lottery during your marriage, you could consider a post-nuptial agreement that would set out how the winnings and any resulting assets in the future. This guarantees a level of protection that would otherwise not be possible, regardless of whether you try to ring-fence the winnings by keeping them in your own bank account.
Lottery winnings are more likely to be considered as capable of sharing when:
- The cost of the lottery ticket was purchased from joint funds
- The lottery winnings are paid into a joint bank account and used for the couple’s joint benefit
- The winnings are used to purchase assets that are registered in the parties joint names
- The lottery winnings have been used to buy an asset which, whilst registered in the winner’s sole name, is used by both parties jointly. For example, the family home
Winning the lottery following a divorce
Under most circumstances, lottery winnings claimed following a divorce will not be taken into account during settlement proceedings. However, this may differ if there is an order for ongoing spousal maintenance. This is because certain maintenance agreements without clean break provisions, may entitle an ex to make a claim if their former spouse comes into new wealth at a later date.
In the case of Nigel Paige, who found himself in similar circumstances, settled out of court and paid his ex-wife the sum of £2 million. A clean break order would have prevented this from happening, and also demonstrates the importance of dealing with finances during the divorce process. Because divorce and finances are separate proceedings, it is easy to overlook getting a clean break, particularly if at the time of the divorce you have no finances to speak of. It is therefore important to remember, divorce does not end the right to make financial claims.
What can I do to protect a lottery win?
The odds of actually winning the lottery jackpot are slim, and may seem like a remote dream. Nevertheless, there is always the chance it could come true. If it did, there are steps that can be taken to protect the funds:
- An unmarried person can protect their winnings by keeping it entirely separate and apart from the rest of the family finances. The intention here is that if you get married or enter a civil partnership, you can show it has never been used for family purposes. Although this is no guarantee that it won’t be shared. A cohabitation agreement may help to document any agreement regarding use of the funds.
- For those who are married or in a civil partnership, keeping the winnings separate does not automatically provide protection. The best way to achieve this aim, is to draw up a pre- or post-nuptial agreement specifying how it will be dealt with if you divorce.
Can lottery winnings be ring-fenced in divorce?
Each case turns on its own unique facts. However, if needs cannot be fully satisfied using other matrimonial assets, the court will turn towards other assets, including those that are otherwise ring-fenced. The court will use such assets to meet the needs of the parties, particularly if there are children involved.
In reality, it may make little difference that you have paid for the ticket from your own funds or that you won following separation, because on divorce, the court has the power to take the winnings into account and divide them where needs justify a departure from the equality of sharing.
What is the position for unmarried couples?
If the couple are living together, then the general rule is that the person who purchased the winning ticket and holds the winnings is entitled to the windfall. Although this may appear unfair, the reality is that the other party would have no claim against those winnings in the event the relationship breaks down. The exception is where, for example, the windfall has already been shared by way of gift, placed in a joint bank account used by both parties, or invested in joint assets, such as a home.
Where children are involved, it may be possible to make a claim against the lottery winner for financial provision for the benefit of any children. For example, to provide a home for a child. However, once the child is 18, the property will return to the lottery winner.
As stated above, an unmarried partner can ring-fence the win by keeping it separate and apart from the rest of the family financial pot. A cohabitation agreement can also help reinforce the intention to keep the winnings separate.
Find The Best Divorce & Family Lawyers Near You
We independently review and list the top divorce lawyers and family solicitors in the towns and cities near you. 100% free.
The information on this website is to be considered a guide and is therefore not legal advice. You use this information with the understanding that Wiselaw does not accept liability for any direct or indirect losses as a result of anyone relying on or acting upon the information on this website. Whilst we endeavour to provide accurate information, Wiselaw does not accept liability for any errors or omissions on this website.
