Wow I won Gold Lotto! What will I do with my $1M bucks?

Wow I won Gold Lotto! What will I do with my $1M bucks
28 Oct

Wow I won Gold Lotto! What will I do with my $1M bucks?

Hang on.  If you are in a relationship, does your partner have an interest?

Unfortunately, the winning may not all be yours.  How would the Family Court view it?  

A windfall can either be a sizable inheritance or a lotto win. In the eyes of the Family Court an inheritance is treated differently to a lotto win.

The Family Court has great difficulty in distinguishing a lotto win by one party as a financial contribution by that party to the assets of the marriage. The Court assess financial contributions of the parties when determining the division of the net asset pool.  In most cases the Courts treat lotto wins as a joint contribution by both parties. That is, that if during the period of a relationship be it a marriage or de facto relationship, one party receives a sizable lotto win and that win is then applied towards the improvements or acquisition of matrimonial assets, the Court would deem that both parties have equally contributed to both the acquisition and improvement to those assets.

Hang on, I bought the winning ticket with my own money.  Why should my partner have an interest if we separate? Let’s examine a case in question.  A wife and husband maintained sole financial estates. They owned property in their respective names solely and operated their own bank accounts. The wife in that relationship purchased a lotto ticket and won a substantial prize. She argued that the lotto win came from her finances which were totally separate to that of her husband.  Why would he have an interest after we separate?

The Court’s view was that because the ticket was purchased during the relationship it was a joint contribution.  It was purchased from the incomes earned by the parties.  It became a part of the assets pool and the normal principles for a division of the net matrimonial assets were applied on the basis that the lotto win was a joint contribution to that asset pool.

What if the ticket was purchased shortly before the parties separated or after the separation but prior to the division of the relationship assets.  It may be different if the parties are living separate lives or planning a separation.  In those cases, the Court may consider that as a lotto win was obtained outside the relationship, the win could be deemed a sole contribution by the party who won the lotto prize giving that party a greater interest in the net relationship assets or even to the extent of quarantining the winnings from the relationship assets and the party who purchased the ticket keeping the total value of the winnings.

The Family Court when deciding a division of the net relationship assets looks at the financial contributions by the parties to the acquisition or improvement of the relationship assets and would take into account the respective value of the contributions made by the parties. Such contributions depend entirely on the facts of the case and the nature of and the extent of such financial contributions.  The Court has a very wide discretionary power when considering such matters.

The contributions by the parties, be they financial or otherwise, are assessed at the date of trial and not at the date of separation. If an agreement is reached between the parties prior to any litigation in the Court and prior to any trial then the value of the contributions would be the values on the date of any agreement entered into by the parties.

The Family Court when considering financial contributions be they lotto wins or inheritances and the financial contributions attributed to such inheritances adopt in most cases a holistic approach to a division of the assets including any winnings or inheritances received.

The essential task is to assess the nature, form and extent of the financial contributions of all types made by each of the parties within their particular relationship.”

Let’s look at the inheritances received by a party.  Are they treated differently?

A later receipt of an inheritance in a relationship is usually given more weight  as a financial contribution by that party than if such inheritance was obtained earlier in the relationship.

There have been many decisions by the Court where the inheritance was received shortly prior to or after separation.  In such cases,  the entirety of that contribution was given to the party who was in receipt of the inheritance and the inheritance was effectively quarantined from the net relationship asset pool. The Court considered in one case that it was preferable to treat the inheritance as a separate asset.  That is because the inheritance was received after the separation of the parties, and the wife in that case, made no contributions, directly or indirectly financially or non – financially to the acquisition of the relationship assets, conservation of or improvement to such assets. In those circumstances, however viewed, it is considered, the significance of the inheritance alternately turns on its impact as a financial resource of the husband pursuant to s75(2) of the Family Law Act. On appeal the husband was successful in keeping his inheritance out of the net matrimonial pool.

The above examples are cases where the inheritance was received shortly prior to separation or after separation. The relevance of s75(2) of the Family Law Act is the Courts consideration of the future financial position of the parties. The inheritance is considered in these circumstances as providing a case where the husband had a resource which could be invested and provide a safe and secure future for him. Because of this the wife did not have that benefit and was given a slightly higher interest in the net matrimonial assets apart from the inheritance.

The Hudson Institute

I’m a member of a financial advising group, The Hudson Institute. I came across a recent article in the newsletter written by one of their financial advisers, Michal Park which deals with “Windfalls” it is an interesting article and for this reason I make it available to download in its full context.  

It is interesting to note in this article, “there are some legendary stories of lotto winners squandering their winnings and ending up in a worst financial state (a common statistic is more than 75% of windfalls are squandered).”

The article then goes on to provide some handy hints as to what a person should do if they do receive a windfall and provides some advice on the investment of the proceeds of that windfall.

I have dealt with many cases where parties have squandered their winning or their inheritance. Many are left in a worse financial position than the position they were in prior the receipt of the windfall. The windfall has led to heartbreak and tragedy, the relationship has broken down and the parties are left fighting over the assets that remain. It is heartbreaking to deal with such cases when in fact the parties, if they had wisely invested their winnings or inheritances, could have lived a very comfortable life for the remainder of their relationship.

I have also dealt with cases where the parties have wisely invested the winnings or inheritances but still could not maintain a relationship with each other.

I do not know which is the sadder of the two.  Be wise.  Seek financial advice and legal advice in such circumstances.

Find out more by contacting James Noble.

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