Separation and lottery wins, Do I have to share?

2nd March 2015

By Lisa Wagner

If you are going through a separation and want to reach a property settlement with your ex after you have received an inheritance or been lucky enough to win lotto you may be wondering how that money will be shared.

Separations involving dividing assets, and occasionally liabilities, between two parties are often referred to as property settlements. Sometimes the assets that are considered in a family law property settlement include lottery wins or even inheritances.

In a separation it is not unusual that particular assets are regarded by at least one of the parties as holding some special significance. Assets that are the result of an inheritance often fall into this category. Sometimes lottery wins are also similarly regarded. So how does the Court divide lottery wins when couples separate and they want to settle their property matter?

In the case of Elford & Elford [2014] FCCA 2531 the Federal Circuit Court was asked to consider what was a just and equitable division of property of the parties which included a significant lottery prize that had been won by the husband shortly after the first year of their 10 year relationship.

By way of background the parties started living together in 2003 when the wife (then aged 35 years) moved with her three young children from New South Wales to Tasmania. At the commencement of the relationship the wife had modest assets, including superannuation entitlements of approximately $130,000 net. At the commencement of the relationship the husband was 57 years of age and in fulltime employment. He was financially secure with significantly more net assets including superannuation entitlements of approximately $110,000 and the home in which the parties then lived. The wife quickly found work and applied her income towards the food for the family and the costs of her children. The husband continued to meet the costs relating to the home and further costs including holidays and the like for the parties.

About eight years prior to the relationship the husband was sorting through some of his late mother’s possessions when he discovered an old Tatts Lotto ticket which had belonged to his late father. Since that time the husband had used the series of eight numbers from that ticket for his own Tatts Lotto tickets which he purchased every week. In 2004 the husband, using those numbers, won the first division Tatts Lotto prize of $622,842. The husband deposited his lottery winnings into a term deposit account in his own name which he “topped up” to $650,000 from his savings. At the time of hearing those funds remained invested in a term deposit account in the husband’s sole name.

At the commencement of the relationship the husband’s assets were more than four times that of the wife’s assets. Throughout the relationship the parties kept both their assets and finances quite separate. They maintained separate bank accounts and did not open any joint account. They had a clear understanding about who would pay for what during their relationship.

The husband claimed that his Tatts Lotto win was his contribution alone. In cross-examination the wife agreed that she did not contribute financially towards the purchase of the ticket, she also agreed that she did not pick the winning numbers, that her husband had been buying weekly tickets with those numbers since long before their relationship commenced, that she had been in a relationship with the husband for less than a year when his ticket won, and that the winnings had been invested by the husband in his name alone.

The facts of this case could be distinguished from a number of other cases involving lottery wins where the Court had found that there had been a common economic objective of the parties. The purchase of the Tatts Lotto ticket in this case was not driven by a common economic purpose nor were the winning funds then managed by the parties together in furtherance of their joint and common objectives. As a consequence the Court in this case regarded that the lottery winnings were a contribution made by the husband alone. This contribution when added to the other contributions of the parties, most significantly their initial financial contributions, meant that the husband’s contributions were worth about 94% of the combined total value of the net matrimonial pool of assets at the time of the trial.

The parties were in general agreement that they should each retain the assets and superannuation entitlements (and liabilities) that were in their sole name. The parties also agreed that there should be an adjustment by the husband to the wife. The point of difference in this case was the amount of money that the parties said should be paid by the husband to the wife as a settlement. In particular the husband sought an Order that he pay to the wife the sum of $50,000 and the wife sought an Order that she receive from the husband the sum of $360,000.

In all of the circumstances the Court ultimately determined that it would be appropriate for the husband to make a payment to the wife to bring her proportion of entitlements in the overall asset pool up to 10%. In view of the net asset pool and the net value of the assets the wife was to retain an additional sum of $50,400 (or rounded up to $51,000) was determined to be a just and equitable in all of the circumstances. Given the parties respective ages, states of health, incomes and earning capacity and different financial assets and resources the Court formed the view that there should be no further adjustment because of the “future needs” considerations required to be considered under s.75(2) of the Family Law Act.

In summary, the particular circumstances of this case ensured that the husband did not have to share his lottery win with the wife notwithstanding that the parties had enjoyed a 10 year relationship.

If you are separated or are thinking about separating and would like to know where you would stand financially in a family law property settlement, especially if an inheritance or other “windfall” sum of money is involved then call me, Lisa Wagner of Doolan Wagner Family Lawyers on 9437 0010 to talk about your case or email me on  enquiries@familylawyersdw.com.au. We have Accredited Family Law Specialists and registered Family Dispute Resolution Practitioners here to help you with any family law matter.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

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