Lottery winnings and divorce: do ex-spouses have to share?
The law surrounding lottery winnings and divorce is complex and often contentious. The decision as to whether lottery money is shared as part of a financial settlement is largely based on the timing and circumstances in which the win was cashed in. Written by specialist divorce solicitor, Hardeep Dhillon, this guide explains how the likely outcome varies depending on whether the lottery winnings were claimed before or after the divorce.
Do you have to tell your spouse if you win the lottery?
There is no legal requirement to tell your spouse if you win the lottery during the course of your marriage. However, during a divorce, all assets including lottery winnings must be declared so that they can be considered as part of the financial proceedings.
Do you have to share your lottery winnings with an ex-spouse?
As more and more people take part in lotteries and prize draws, it is inevitable that many of those who win will either be or become, involved in a divorce – hopefully not as a result of the lottery winnings!
Although it has no legal basis, the generally held belief is that if you are married then, when your numbers come up, your spouse is entitled to half of the winnings. But with regards to lottery winnings and divorce, is this still necessarily the case? Can lottery winnings be considered matrimonial property as part of financial settlements? And what would the difference be if you were to split up either before or after your win?
First, let’s consider the relevant case law.
What does the case law say?
In a landmark case, the High Court held that, where one party to a marriage wins the lottery, the other will not share in those winnings unless they were acting together in the ticket’s purchase – in other words they were effectively acting as a syndicate – or unless the proceeds are invested in joint assets or property such as the matrimonial home.
When considering a syndicate the court set out that the syndicate could be either formal or informal and had to be a situation where both were aware that tickets are being bought and where both have agreed tacitly or expressly to their purchase, then the purchase would be considered a matrimonial property and shall be normally shared equally. However if the ticket is purchased unilaterally, without the knowledge of the other party, then the prize was described to be ‘akin to an external donation’ and therefore non-matrimonial.
This ruling, thought to be the first in the UK on lottery winnings and divorce, is centred around a hotel porter who claimed a proportion of his former wife’s lottery winnings.
The couple had been living in a Council house when his wife won the money without her husband’s knowledge more than 10 years ago. The Judge found that the wife had been playing the National Lottery, without her husband’s knowledge, from her own earned income and thus the starting point was that the lottery prize of £500,000 was ‘non-matrimonial money’. However, the wife then used some of the money to purchase what became the new family home. In doing so, she converted that part of her non-matrimonial asset into matrimonial property.
As a result of this, the Judge decided that this element of the winnings comprised matrimonial property and awarded the husband a lump sum which reflected the short period of time in which he had lived in the property but still more than he would have received had his wife kept the money in the form of cash.
This is an interesting decision – another one that ‘ring-fences’ assets after each party’s needs have been met, rather than applying the so-called sharing principal to all property, rather than just joint matrimonial property.
There is some concern that the court’s decision widens the range of assets that the courts are willing to regard as non-matrimonial property. In turn, this may lead to couples protecting their assets when they could better be used for the benefit of the family as a whole.
One thing which is certain is that this is unlikely to be the end of the matter and that there will inevitably be other cases which test the rule in the future – perhaps ones where the use of the funds is less clear cut than in this case.
Lottery winnings claimed before a divorce
In the case described above, the lottery winnings were used to fund the purchase of a matrimonial home prior to the divorce. This portion of the winnings was therefore regarded as matrimonial property, so the Judge ordered that a lump sum should be paid to the ex-husband to reflect the time he had spent living in the home.
This case highlights that lottery winnings can be considered in financial settlements where they are used to purchase matrimonial assets before a divorce takes place. But what about in situations where the lottery winnings are claimed after the divorce?
Lottery winnings claimed after a divorce
Under most circumstances, lottery winnings claimed after a divorce will not be considered during the settlement process. However, this may differ if an ongoing maintenance agreement is in place.
Certain maintenance agreements without clean beak provisions may entitle an ex-spouse to make a claim if their former partner comes into new wealth at a later date (for example, through a lottery win). Such was the case when Euromillions winner, Nigel Paige, agreed to settle out of court and pay his ex-wife the sum of £2m.
Given that a clean break clause would have prevented this from happening, it is advisable to contact specialist divorce solicitors to discuss any ongoing maintenance agreements you put in place following a separation. This also demonstrates the necessity of ensuring that you deal with all matters relating to the finances. Divorce and finances are separate proceedings and the divorce does not end the right to make financial claims.
Contact our divorce lawyers for support
If you are currently experiencing matrimonial or family related problems, then you should make sure the financial aspects of your marriage are understood and in order.
Richard Nelson LLP’s divorce lawyers can assist you with making appropriate agreements for dealing with the financial aspects of living together and splitting up. Our family lawyers offer a range of services related to divorce, financial arrangements, childcare and more.