Divorced man’s $250k lotto dilemma
Welcome to Sisters In Law, news.com.au's weekly column solving all of your legal problems. This week, our resident lawyers and real-life sisters Alison and Jillian Barrett from Maurice Blackburn tackle your legal rights when it comes to lottery wins and breakups.
QUESTION: I was with my wife for 20 years until last year when we decided to separate as we'd grown apart. We have two kids together, one who has moved out of home and another who lives between the two of us. My wife stayed in the family home and I'm renting a unit until our finances are officially divided. We're not yet divorced but we've been living apart for almost eight months. The thing is, I had a very fortunate lottery win last month - it was $250,000 which isn't life-altering but enough to get me a nice place to live in when I retire in 10 years' time. My question is, do I have to tell my wife about the win and is she entitled to half? It feels unfair that she would get any of it as we were separated when I bought the ticket. - Frank, NSW
ANSWER: Firstly, congratulations on your win, Frank.
Property settlements, once a couple has separated, involve dividing assets and any liabilities. It's a final resolution so that each person can retain any assets they received in the settlement and move forward with their lives.
It can be better to resolve a property settlement sooner rather than later following separation as the law takes into account assets at the time of the settlement, rather than at the time of the separation.
You now know this all too well.
It's not clear if you have a binding financial agreement (commonly called a "pre-nup") that was entered into prior to your relationship commencing. Sometimes these agreements are not properly drafted, and therefore not binding. They are also relatively rare, so we'll work on the basis you don't have one.
There are a number of myths about property settlements following a relationship breakdown, so here are a few key facts to bust those myths:
• Assets brought into the relationship by either party aren't excluded (for example, if you own a home before you are married this will be treated as an asset to be considered as part of the settlement)
• Assets acquired after separation, but before the property settlement, are treated the same way
• It doesn't matter who is responsible for the breakdown of the marriage
• Moral considerations as to a person's conduct during the marriage have no relevance
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The steps to a property settlement are:
1. Identifying and valuing all assets, liability and financial resources
Everything must be included here, from your furniture and car to the lottery win, and any debts or loans.
2. Assessing, identifying and evaluating contributions
All financial and non-financial contributions must be considered: Homemaking and parenting are just as important as the financial contributions.
The initial contributions each person made at the start of the relationship will also be taken into account, as well as any inheritances received and how they were used.
3. Assessing current and future circumstances
Age, state of health, current earning capacity and many other factors are considered for you and your ex-wife, as is the age of the children.
The law has to consider what is fair and equitable taking into account the financial circumstances and all other factors.
4. Just and equitable requirement
This is a checking mechanism to ensure that settlement is fair.
In relation to your lottery win, Frank, you must list it as an asset for the property settlement.
There are a number of similar cases dealing with lottery winnings that have been before the courts in Australia.
In 1995 the Family Court, in the case of Zyk, said that lottery winnings should be viewed as a contribution to the couple's asset pool. Here, the husband won the lottery as part of a syndicate, while married, and used shared incomes to purchase it. The winnings were used for joint purposes. The judge decided that the winnings were a joint contribution, rather than a contribution from the husband.
In 2013 the Family Court was required to decide whether the wife's winning lottery ticket, which had been purchased after separation, was a joint contribution. In this case, known as Eufrosin, the judge decided the couple had separated and their finances had also been separated, so the ticket had been purchased with her money alone and the winnings weren't a joint contribution to be split.
In a 2016 case, Elford, the Family Court was required to decide what to do with lottery winnings that the husband had received shortly after marriage. Here, the couple had mostly separate finances, the husband had bought the ticket using his own money and choosing the numbers himself. The winnings had been put in a term deposit, solely in his name, and not used during the marriage. The judge determined the husband had solely contributed this money.
While every case is decided on its merits, and we don't have all of the facts of your particular situation, it sounds similar to the 2013 case of Eufrosin because your finances are now separate.
A court may therefore order in your favour that the winnings are not a joint contribution, and therefore while you will have to list it as an asset in the property settlement, you won't have to share it with your ex-wife.
You should obtain specific legal advice, and provide your lawyer with all relevant information and documents.
This legal information is general in nature and should not be regarded as specific legal advice or relied upon. Persons requiring particular legal advice should consult a solicitor.
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Originally published as Divorced man's $250k lotto dilemma