I am sure like me, many people avidly checked their lottery tickets the morning when the news of a UK based winner of the £184,262,899.10 EuroMillions jackpot was announced. The injection of such a sum is life changing, but what happens if when that windfall arrives you are going through a separation? How is a lottery win dealt with?
In order to answer this, it is important to recognise that the position is very different for those who are unmarried to their partners in comparison to those who are married or civil partnered.
Unmarried couples
If the lucky lottery winner is unmarried, then the general rule is that the person who purchased the winning ticket and holds the winnings, is solely entitled to the windfall. Their partner has no ability to make a claim against those winnings if their relationship breaks down. If the lottery winner chooses to share the windfall with their partner by providing them with a gift, depositing funds into joint accounts/savings or by investing them in a joint asset like a new property, then claims can be made against these shared funds only.
Where the couple have children it may be possible to make a claim for some of the lottery winnings to ensure that both parents have funds to provide for the children. This can be to provide a home for the children or for specific items like clubs/activities or school fees. When funds from the lottery winnings are used to provide a home for children, this can only be enforced whilst the children are under 18. As soon as the children reach majority the funds provided will automatically revert to the lottery winner.
This may seem very unfair but it important that individuals in this situation are aware this is the legal position.
Married couples or civil partners
In stark contrast when a couple is married or civil partnered, upon divorce / dissolution, the Court will carefully consider the windfall, even if it has been retained by the winner or received following the couple’s separation. During a divorce / dissolution all of the assets owned by the couple must be disclosed, so that the Court can determine what is fair in the context of each particular couple.
The Court will, however, also take into account when the win has been received. If the win is received whilst the couple are happily married it is likely to be considered ‘Matrimonial property’. As such, the starting point for the Court will be to share it in subsequent divorce/dissolution proceedings (although not necessarily equally). On the other hand, if the lottery win happened after a couple’s separation it is likely to be considered ‘Non-Matrimonial property’. The Court’s starting point for Non-matrimonial property is that it should remain with the person who owns it, but it can be brought into account if this is required to ensure that all of the couples’ needs and the needs of their children can be met. There are, however, circ*mstances that can alter the categorisation and treatment of such winnings.
In one reported case, a wife (together with a friend with whom she had entered into a written syndicate agreement) purchased a winning national lottery ticket and each received prize money of £500,000. This win happened some four years prior to the marriage breakdown. There was no dispute that the wife had purchased her own ticket, indeed the husband even gave evidence that he did not even know she participated in the lottery. The couple had been married for more than 25 years and had two adult children. Following the windfall, the wife used £300,000 from the lottery win to purchase a home in her sole name, in which the couple lived until their separation.
In that case, the Court found lottery win was ‘non-matrimonial’ property, as by the time it was won the marriage was already in trouble and the husband knew nothing of the wife’s syndicate with her friend. However, when the wife purchased a property in which the family and the children lived, the Court found that that part of her lottery win was transformed into ‘matrimonial’ property. Given the source of the funds and the needs of the couple, the Court determined that the husband was not entitled to an equal share and instead awarded him slightly less than 20% of the equity in that property.
It is easy to see circ*mstances in which a lottery win could be viewed as being ‘matrimonial’ and therefore capable of being shared:
- if the cost of the lottery ticket is paid from joint funds;
- where the lottery winnings are paid into a joint account and used for the couple’s joint benefit;
- where the lottery winnings are used to purchase assets that are registered in the parties’ joint names; and
- where the lottery winnings has been used to purchase an asset which, whilst registered into the winner’s sole name, is nevertheless used by the parties jointly – the most obvious example being a family home.
Is there anything you can do to protect a Lottery win?
Whilst the odds of winning the lottery jackpot are slim and may seem a remote dream rather than a reality, there is always the chance that the dream could come true, so if it did there are steps that can be taken to protect the funds:
- an unmarried person can protect their win by keeping it entirely separate and apart from the rest of the family financial pot. The intention for this win to be kept separate could even be documented in a cohabitation agreement so there is clear evidence of this; and
- in the case of those who are married or civil partnered, keeping the winnings separate does not automatically afford protection, the best way to achieve this is likely to have a nuptial agreement put in place. The terms of such a document will need to be specific to the particular circ*mstances of the family requiring it.
If you have any questions about the above and would like specific advice about your circ*mstances then please do not hesitate to contact a member of our highly experienced family team who will be able to assist you.
