How Are Lottery Winnings Treated in Divorce?
Property Division Issues
One of the most significant divorce issues that winning the lottery can impact involves property division. Depending on where you live, a court divides property you and your spouse acquire during marriage according to either “community property” or “equitable distribution” principles. If you live on the East Coast and filed for divorce there, your state probably uses equitable distribution principles of property division.
Under principles of equitable distribution, all property a couple acquires during their marriage is subject to an “equitable” division upon divorce. “Property” includes financial assets, such as money, investments, retirement accounts, etc. Courts in equitable distribution jurisdictions have held that an “equitable” division is not necessarily an “equal” division. Instead, a court determining the division of property in a divorce will divide marital property that is just and fair under the specific circumstances of the case.
So how do lottery winnings come into play? How lottery winnings are treated all depends on timing. Because the only property that the divorcing couple acquired while married is subject to division upon divorce, any property either party acquired before or after their divorce is not subject to division upon divorce.
Winning the lottery during marriage. If one of the parties won the lottery while married to the other party, then their lottery winnings are subject to equitable distribution upon divorce. In some cases, a party may have won the lottery or a jackpot at the casino, and hid their winnings from the other spouse. Courts have ruled such concealed winnings would have been considered as marital property subject to division upon divorce.
Winning the lottery before divorce but after a couple separates. If a spouse wins the lottery after the couple separates but before divorce is finalized, how a court treats those winnings depends on which state the divorce was filed. Some states consider the date of separation to be the effective “cut-off” date for the division of marital property. Other states consider the date the parties filed for divorce to be the effective end date for the parties marriage. In either case, if you won the lottery after separating from your spouse with no intention of reconciliation, you have a good argument that the lottery winnings are your separate property and not subject to equal division upon divorce.
Impact on Child Support and Alimony
When courts decide issues of child support and alimony, they consider the respective financial conditions of the parties. In many states, lottery winnings are considered to be the income of the spouse who won them. As mentioned above, if the parties won the lottery while married, it will be considered to be income attributable to both spouses.
What if someone wins the lottery after their divorce is finalized? This sudden, unexpected, acquisition of wealth can still affect divorce obligations. Orders for child and spousal support can be modified if there has been a substantial or material change of circumstances that makes the original order inapplicable.
For example, if a spouse who was receiving child support and alimony payments won the lottery, the other spouse can request the court to terminate or reduce the amount they have to pay in child support. They can argue that the spouse who received domestic support payments no longer has a need for such support.
Conversely, if a spouse who was paying child support won the lottery, the other spouse can ask the court to increase the winning spouse’s domestic support obligations. They can argue that the payor spouse’s ability to pay has increased. However, some courts may only increase support payments if the original support order was insufficient to cover the child’s needs or allow the spouse to maintain the standard of living established during their marriage.
Contact DiPietro Law Group for Quality Legal Representation
If you have questions about divorce or other family law issues, you should consult an experienced attorney from DiPietro Law Group. We are dedicated to helping families throughout Maryland and Virginia find fair and just solutions to their legal disputes.
Contact DiPietro Law Group at (888) 530-4374 to schedule a consultation with one of our skilled attorneys today.