When Lottery and Divorce Meet…

On behalf of The Marks Law Firm, L.L.C. posted in Divorce and Property Division on Friday, April 25, 2014

Recently, the Indiana Court of Appeals upheld a trial court ruling that a man who won the lottery while separated from his wife only had to pay her 2.5% of his winnings, rather than the presumptive 50% marital interest.

The facts of the case are somewhat unique and somewhat help to explain the outcome.  Husband and wife had been separated for six years before the lottery win.  They lived in separate residences, maintained separate bank accounts, and in fact other than two or three conversations had no contact with one another during this time.  They lived as physically separate as two married individuals could possibly live.

Of course, winning the lottery can suddenly bring two separate people back into contact.  Perhaps anticipating this, husband filed for divorce within a month after winning the lottery ($2 million).  The Indiana family court felt that the marked period of prolonged separation justified an unequal distribution of property.  The 2.5% seems unrelated to the time the parties lived together prior to separation (4 years, together, 6 years apart), and seems to treat the couple as essentially a non-couple for the purpose of the lottery winnings.  The appellate opinion sheds very little light on the rationale behind the decision, only upholding it as within the discretion of the trial court.

Would a Missouri court reach a similar outcome?  Probably not.  In Missouri, courts begin with the presumption that each spouse is entitled to an equal division of the marital assets, and to consider a departure from that presumption, the court can only consider limited factors, including the economic disparity between the parties, the earning capacity of the parties, the contribution of each spouse to the marital property, and any marital misconduct.  A Missouri court would find the lottery winnings marital property, as they were acquired during the marriage.  A Missouri court would note that wife earned less than husband and had fewer assets than husband.  A Missouri court would also note that husband had a “lottery habit” and bought tickets throughout the marriage, all with marital assets – whether they were living together at the time or not.  Because no party engaged in serious marital misconduct, a large disparity in distribution of the assets would likely be rejected.  A Missouri court likely would have awarded wife at least 35% to 40% of the lottery winnings to wife.

Would an Illinois court reach a similar outcome?  Interestingly, Illinois has had such a case on similar facts and found that the trial court’s reliance on the separation to give the wife only 6% of the total marital assets, and none of the lottery winnings was mistaken and that only “extraordinary circumstances” could warrant such an inequitable distribution.

So, for those current and future lottery winners estranged from your spouse thinking a divorce will allow you to keep all of the winnings, in Missouri and Illinois you should think of that possibility as the same as winning the lottery twice – not very good odds.

If you have questions about distribution of lottery winnings during divorce, contact us – we can help.