Lottery Winners and Divorce: A Complete Guide
- If you won before you filed
- If you won during divorce proceedings
- If you won after your divorce was finalized
Most of us have pondered what it would be like to win the lottery. But studies show that winning the lottery isn’t always what we envision. For some, lottery winnings can be the way out of a bad marriage. Further complicating this is how those winnings would have to be divided in a divorce situation.
Is divorce more likely for big lottery winners?
Whether we like it or not, money factors into all corners of our lives, including our marriage. So, it’s no surprise that one of the primary causes of divorce today is the lack of financial resources.
What happens when a married couple wins the lottery, and a lack of money is no longer an issue?
Recent studies show that winning the lottery affects men and women in different ways regarding marriage. A Swedish study looked at how “large, positive wealth shocks” impacted marriage by studying a group of Swedish lottery winners over a 10-year period after their win.
The study suggests that a lottery win increases a man’s desire to get and stay married. Furthermore, single male lottery winners were 30% more likely to marry within five years of their win and more likely to go on to have kids.
For women, windfall wealth (at least in the short-term) doubled their desire to divorce within two years after the win. The study noted that while a lottery win didn’t necessarily cause a divorce, it accelerated the decision for women who were already unhappy in their marriage.
What happens to your winnings if you divorce?
You won the lottery. Great luck! But your spouse (or you) now want a divorce.
One of the issues you’ll face is how those lottery winnings factor into your divorce.
Divorce laws require divorcing spouses to divide their marital property fairly. This includes homes, bank accounts, investment accounts, debt, and income. Property considered “separate property” is the individual spouse’s to keep. But what is marital property, what is separate property, and where do lottery winnings factor into this?
Separate property is anything you own outside your marriage. This includes the following:
- Any property you and your spouse owned before you were married or after your separation or divorce
- Any property you or your spouse inherited or were gifted individually during the marriage
- Any award or settlement from a civil lawsuit designed to compensate one of you for losses
- Any property you and your spouse expressly provided for in a prenuptial or postnuptial agreement
Even in these scenarios, however, separate property can become commingled with marital property and lose its separate designation. If it does, it will also need to be divided in your divorce settlement agreement.
Marital property, or any property, financial assets, or debt you or your spouse acquired during your marriage, must be divided if you divorce. Depending on when your lottery win occurred, it may or may not be considered marital property.
If you won before you filed
If you and your spouse won any money during your marriage, these winnings are considered marital property. This is true regardless of which person purchased the winning ticket. You’ll need to divide the money with your spouse according to the divorce laws in the state where you file.
- If you are filing for divorce in a community property state, your marital property must be divided equally.
- If you live in an equitable distribution state, property division considers many factors. Property division must be “equitable” but not necessarily “equal.”
In either case, your lottery winnings are subject to division with your soon-to-be ex.
If you won during divorce proceedings
If you or your spouse won the lottery during your divorce proceedings, how it will be divided depends on the date you won and the state laws where you filed for divorce.
Some states consider your separation date as the official cutoff for marital property division. Others consider the date you filed for divorce or your final judgment as your cutoff date.
For example, in New York, the cutoff date for marital property division is when you file for your divorce. In California, it is the official date that you and your spouse became separated.
Depending on the state, the court can have considerable leeway in deciding how lottery winnings will be divided, depending on the circumstances of the divorce case. For instance, if you are filing for divorce based on fault-based grounds, the court may consider the behavior of the at-fault spouse when deciding who gets the lion’s share of a lottery win.
If you won after your divorce was final
After your divorce is final, any lottery winnings are officially considered your separate property. They are not subject to property division. However, it’s important to know that lottery winnings may be considered when the court makes decisions about alimony or child support.
How can I protect my lottery winnings in divorce?
Chances are, if you won the lottery while you were married, it will be considered marital property and there is no way of “protecting” it from your spouse. Your spouse will have the right to their fair share of those winnings.
Do I have to tell my ex if I win the lottery?
During the divorce process, you’re required to declare all your income, assets, and debts to each other. That includes lottery winnings. Not doing so could result in some serious consequences.
But what happens if you win the lottery after your divorce? Do you have to tell your ex?
If you win the lottery after your divorce, your winnings are your separate property. Your ex has no right to a share of that. However, if your financial situation changes significantly, your lottery winnings could be fair game regarding spousal support or child support.
If you were to win the lottery after your divorce, your spouse could ask the court to consider your new financial circumstances and adjust your alimony or child support payments. Conversely, if your ex won the lottery and you had been paying spousal or child support, you could seek a modification from the court to get your payments adjusted.
Divorce can be financially complicated. At Hello Divorce, we aim to make it as inexpensive and uncomplicated as possible. We offer everything from online divorce plans to flat-rate professional advice so you can make important decisions regarding your divorce and your future. To learn more, schedule a free phone call with one of our friendly account coordinators.
The Effects of Wealth on Marriage and Fertility. National Bureau of Economic Research.