It’s been a tough year for many Australian’s and coming into the New Year we’d all love to be fortunate enough to have a windfall of some kind. Winning the lotto or any big windfall isn’t easy; otherwise, we’d all be walking around as millionaires. But having a windfall does happen from time-to-time, and the question arises if you’ve won the jackpot and also happen to be in a dissolving relationship? Whether it’s a win in the lotto, pokies, or another substantial win, keeping your money comes down to the nature of the relationship, the timing of the win, and who is financially dependent at the time.
Going through a marriage separation is difficult, and when it comes to splitting the finances, every dollar can count towards setting up your future. One of the most common questions that can come up is; what is the law on splitting windfalls if money was won during the relationship or just after? The outcome can vary depending on many things.
Here are a few things to consider:
Who is entitled to the money?
It doesn’t matter if it’s a marriage or a de facto relationship, lottery wins prior to and after separation remain property for a final property settlement under the Family Law Act 1975. According to the law, lottery wins are considered property acquired through an unexpected or chance event. In most cases, the courts will hold that a lotto win is generally considered part of the marital pool of assets to split. However, it can come down to the timing of the receipt of a windfall such as a lottery win.
If a winning ticket was bought during the marriage, it’s considered a contribution by both parties. But the critical question is, did both parties have an income to contribute at the time and do the parties maintain separate finances?
In cases where one party is the stay-at-home parent and involved in domestic duties, the win will be considered a joint and equal contribution. Where it becomes a little trickier is if the win is not considered an equal contribution, and when parties have been living separate lives or have maintained separate finances.
In most of the above circumstances, the court may adopt a two-pool approach. This would be divided into one pool for the lottery win and one for the rest of the balance of the assets.
There are also examples of people winning money months after official separation and still having a claim on some of the pooled money.
Examples of some cases that have not had expected outcomes
ZYK and ZYK (1995)
In this case, the parties had been married for two years when the husband had won $95,000 in a syndicate. The syndicate had been active before the marriage, and the wife had never had anything to do with the syndicate with either picking numbers or contributing money for the tickets. The courts awarded the win was to be formed as part of their joint property.
Farmer v Bramley (2000)
Another interesting case was when the husband won a lottery prize of $5 million, 18 months after separation. Both parties had lived together for 12 years, but at the time of separation, there were no assets of any significance and so at the time they had not entered into a financial settlement. In this case, the wife had provided for the husband during drug addiction, supported the husband financially while he studied, and the child had lived solely with the wife post-separation without any support. The courts took into consideration that the wife’s financial contributions and ongoing care of the child and awarded 15 per cent of the winnings to be paid to the wife.
Eufrosin v Eufrosin (2014)
This case has in another example of a post-separation win where the wife had bought a lottery ticket six months after separation and won $6million. The husband argued that the wife used the money to buy the ticket out of the business money that was the husbands during the marriage. At the time the wife had purchased the ticket, the parties had begun leading separate lives and separate financial lives. Even though the party’s joint relationship had been dissolved and there was no common use of property any longer, the court awarded an adjustment to the husband. Based on the husband’s more significant financial needs, the courts awarded the wife to pay $500,000 of the wins to the husband.
It’s safe to say that there are many reasons a court will award a windfall to the other party in a relationship, and it’s not always as straight forward as it seems. Timing is key and whether the relationship is financially dependent or not.
For advice on legal matters regarding a windfall, contact us at Wilson Haynes Law so we can advise you on your options.