Imagine for a moment that you have won the lottery! Whether your first move is to buy an expensive house or car, or jet-set around the world, you may assume that the money is yours and yours alone. But this may not be the case! When parties are divorcing, the court may view your lotto winnings as a sole or joint financial contribution and can order that you give half of it to your ex-wife or ex-husband!
The Legislation
Section 79 of the Family Law Act 1975 allows the court to make an order in property settlement proceedings to alter the interests of married parties in the property. It provides that:
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines
How does this apply to Lottery Winnings?
Surprisingly, this happens more often than you might think! Let’s take a look at some cases where parties have separated and sought a share of lottery winnings.
Zyk and Zyk (1995) FLC 92-644
The husband and wife married in February 1985, separating eight years later in July 1993. They continued to cohabitate, however the Husband had moved out by the time the matter proceeded to trial. The husband had been buying lottery tickets through a syndicate since the early 1970s. In 1987, the Husband won $94,907 through this syndicate.
The trial judge found that this sum was a financial contribution by the husband only. The wife was not a member of the syndicate and was not involved in the purchase of any lottery tickets. While the husband usually gave his money to the wife who had control over the family’s finances, he bought the lottery tickets with his own money.
On appeal, the court found the lottery winnings should have been treated as a joint contribution as the ticket had been purchased by joint income of the former couple. Even though the husband had been buying the lottery tickets since before the relationship, the court held the purchase of the ticket should have been treated as a joint purchase. The fact that the winnings had been paid by the husband to the wife and applied for their mutual benefit supported this conclusion.
The court held that in most cases, money from a lottery win during cohabitation should be regarded as a joint contribution. However, as a more recent case will illustrate, that is not always the case.
Farmer v Bramley (2000) 27 Fam LR 316
The parties were married in 1983, then separated in January 1995 before divorcing in April 1997. In September 1996, the husband purchased a winning lottery ticket for $5 million.
The husband claimed that he purchased the ticket for his mother, but the judge rejected this argument, holding that he purchased the ticket for himself and that the winnings could be distributed in the divorce. The judge considered the contributions of the wife including her care the child of the marriage and awarded the wife $750,000 from the $5 million. This was partly because the husband had a heroin addiction and supporting him in managing this added to the burden of the wife’s contribution over the 12 years of their marriage.
The husband appealed the decision, challenging the trial judge's finidng that it was him, and not his mother, who owned the lottery ticket. He submitted that the trial judge erred in finding that his wife should be awarded part of the winnings for her contributions. The decision was upheld on appeal, with a majority finding that the wife had a legal entitlement to part of her ex-husband’s lottery winnings.
Elford & Elford (2016) FamCAFC
The husband bought a winning lottery ticket roughly one year after the parties began living together, winning over $622,000. The husband deposited the funds in a bank account owned he solely. The parties separated after 10 years together and a trial judge awarded her roughly 10% of the former couple’s property. The wife appealed the decision, arguing that it was unjust. She submitted that the trial judge had erred in considering the lottery winnings as a financial contribution made by the husband, arguing that it was a joint financial contribution.
The Full Court dismissed her appeal, finding that the winnings were a contribution made by the husband. Some of the reasons for this were:
- The husband had been purchasing lottery tickets bearing the same numbers for at least 8 years before the parties became a couple
- The husband and wife kept their finances completely separate and had separate bank accounts
- The husband had never intended that the weekly purchase of the lottery ticket was to be a joint matrimonial purchase
The Takeaway
Whether you get to keep all of your winnings and drive off into the sunset in your brand new ferrari will depend on a number of circumstances.
The courts are likely to treat the winnings as a joint contribution if you and your spouse had shared finances. Even if you bought the ticket out of your own money, as Mr Zyk did, the court may still hold the winnings to be a joint contribution. If this is the case, the money will be treated like any other asset and be divided in a just and equitable manner.
If your spouse and yourself kept your lives fianncially seperate, there is a greater chance you will get to keep your winnings!
DISCLAIMER: The information provided above is published for general informational purposes only and is not intended to be nor should it be relied upon as a substitute for legal or other advice.