If a couple separates and one of them wins lotto, can that person be legally required to share their lottery winnings with their ex-partner?
As a family lawyer, I am sometimes asked whether lottery winnings form part of a couple's assets that are to be divided in their property settlement. A typical question sounds like this.
"I've separated from my spouse and we are moving towards a divorce. After we separated, I bought a lottery ticket and won a million dollars. We have been living separate lives for almost 12 months and I bought the ticket with money I earned after we split.
"So, do I have to tell my spouse about the win, and what does the law have to say about whether I have to include my lottery winnings as part of the divorce settlement?"
While it's great to win lotto, this type of windfall is treated the same as any other asset you acquire during your relationship, whether it be a marriage or a de facto partnership.
Does the law require lottery winnings to be shared with an ex-partner?
Under the Family Law Act 1975, unless there is a pre-existing binding financial agreement signed by the couple - also known as a "prenup" - everything you have together is treated as part of the pool of assets when deciding a family law property settlement.
From lottery winnings to an unexpected inheritance payment, or even a business windfall - the answer is the same. Assets acquired after separation but before the property settlement is finalised are generally treated as an asset and considered as part of the settlement.
But the word "generally" is important. There have been Family Court decisions that demonstrate the law isn't absolute on this matter, that each case is weighed according to its own particular factors.
Significance of joint or separate finances
In a landmark case in 1995, Zyk v Zyk, the court ruled that a man had to share his lottery winnings with his ex-wife. Mr Zyk had won the lottery as part of a syndicate he was in during the marriage.
When they split, the court found there had been a joint effort in their finances, so the lottery win had to be divided. (See Rebecca Miriam Zyk Appellant/Wife and David Zyk Respondent/Husband  FamCA135.)
Another case with a different outcome involved a couple who had always kept their finances separate during their time together.
While married, the husband won on a lotto ticket he had bought and kept the cash in his account. The judge decided that the lottery winnings were not the result of a joint endeavour and ruled that the husband could keep the entire amount.
What if winning ticket is bought after relationship ends?
In another family law case in 1997, a separated couple went to court to battle over almost half a million dollars in lottery winnings.
The woman successfully argued that she should keep all the money, because the couple were not married or living together at the time she bought the lotto ticket, and because she bought it with her own money. (See Jeffrey Douglas Brease Appellant/Husband and Lilly May Brease Respondent/Wife  FamCA23.)
Future needs of other party can be taken into account
If one spouse or partner has a big lotto win and the couple separates, the court can take the future needs of the other party into consideration.
In Farmer v Bradley, the wife was awarded $750,000 from her ex-husband's lottery winnings. Although the husband had won the $5 million 18 months after they had separated, the court considered the wife's non-financial contributions during their 12 year marriage. She walked away with around 15 per cent of the winnings.
This case demonstrates that the court considers the contribution of each person to the relationship, as well as who actually bought the winning ticket and who paid for it.
Importance of finalising property settlement as quickly as possible
While it's great to win the lottery, it is wise to get independent family law advice on how to handle a windfall, as it can lead to financial woes and heartache - especially if separation is on the cards.
It is best to resolve asset division as soon as possible after a relationship is over. To learn more about property and finances after separation, visit the Federal Circuit and Family Court of Australia website.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.