Most people are surprised to learn that lottery wins acquired after separation can form part of the property pool available for distribution between them. If they have not already formalised a property settlement. Whether a lottery win is categorised as a joint contribution or sole contribution to the property pool is important.
Practically speaking, if categorised as a joint contribution, the property would be distributed accordingly.
If categorised as a sole contribution, the party who acquired the winning lottery ticket is likely to retain a much greater portion of the winnings.
In the 2014 matter of Eufrosin & Eufrosin1 the Full Court of the Family Court considered the purchase of a winning lottery ticket by the wife 6 months after separation. The husband contended that the wife had used funds from a business operated by him to purchase the winning lottery ticket. However, the Court found that whilst regular withdrawals were made from the business by both the husband and the wife after separation, those funds were then applied by each party to their own individual financial lives, being wholly unconnected with the former marital relationship. Accordingly, the source of funds used to purchase a lottery ticket will not by itself determine the issue of whether a lottery win after separation will be considered a sole contribution by a party or a joint contribution of the parties to the property pool.
If the parties’ have separated and there is no longer a common use of property and financial resources at the time the winning lottery ticket was purchased, a lottery win is likely to be considered a contribution to the property pool by the individual who obtained the ticket.
If the parties’ have separated but are not yet living separate financial lives (this might be the case if the separation is very recent), then the Court may find that the lottery win is a joint contribution to the property pool.
Even if a party successfully convinces a Court that the lottery win received after separation was their sole contribution to the property pool, the court may still award the other party a portion of it.
The reason that the Court will often (but not always) award the other party a portion of the lottery winnings is to account for the other party’s future needs after separation.
This is intended to provide a fair and equitable outcome ensuring that each party receives a fair distribution of the property having regard not only to their contributions to the property pool, but also, their future needs after separation.
To demonstrate the point, in the above matter, as a consequence of the husband’s greater financial needs after separation, the husband was awarded the sum of $500,000 of the lottery win.
Similarly, in the matter of Farmer & Bramley2 the husband won the lottery 18 months after separation in the sum of five million dollars ($5,000,000).
In that matter, the parties had lived together for 12 years, however at the time of separation there were no assets of any significance.
During the relationship the wife supported the husband through a heroin addiction, whilst he studied, and the child of the relationship resided solely with the wife without any financial support from the husband.
In that matter, having regard to the wife’s significant financial and non-financial contributions throughout the twelve-year relationship and the existing disparity of the parties’ financial circumstances at the time of the hearing, the Court awarded the wife in the sum of $750,000 (approximately 15% of the winnings).
Similarly, the matter of Bradley & Weber3 the husband won a lottery in the sum of $1.27 million, six months after separation.
The wife was awarded $225,000 (approximately 20% of the winnings) even though the husband had purchased the lottery ticket six months after separation, and they had been living separate financial lives.
The above cases are good examples of why parties should formalise their financial affairs between them at the earliest possible opportunity to ensure any future property acquired by them is free from any claim as their former partner or spouse.
Had the above lottery wins been received after formalising the financial affairs by a binding financial agreement, or Final Orders of the Court, thereby bringing an end to the financial matters between them, the other party would not have been entitled to receive a portion of the winnings.
1 [2014] FamCAFC191.
2 [2000] FamCA 1615.
3 (1997) FLC 92-770.
