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Losing out when you win the Lottery

7th December 2021

Everyone has imagined winning a sizeable sum of money on the National Lottery and deciding what to do with it.  Most of us focus on the holidays we would enjoy and the help we would provide for family members, but few would imagine legal fees playing a major part in the story.

People falling out when one party suddenly comes into a large amount of money is nothing new, but the complications that can arise following a large Lottery win are often based on the status of the relationship between the two parties at the time of the win.

In simple terms, can one party in a relationship keep their entire win without the other party claiming some of the winnings?  In the case of a happily married or co-habiting couple, problems can occur when one party in the relationship is genuinely estranged, or seeking to end the relationship.

In such a situation, the question is how much of a claim on any winnings does the other party have? When one half of an unmarried couple wins the Lottery, the other party generally has no claim on the money, just as they would have no claim if the relationship were to come to an end.

The exceptions to this occur when the money has been shared by being placed in a joint bank account or used to invest in joint assets such as a home.  When a couple are married or in a civil partnership but are getting divorced, the status of the winnings will be considered by the Court, if no arrangement can be agreed between the parties.

The process will involve both parties disclosing all their assets for the Court to decide how they should fairly be apportioned, with jointly owned property generally shared, although not always equally.  Non-matrimonial property, such as that owned by one party before the marriage began, or acquired after separation took place, isn’t covered by the principle of everything being fairly shared.

Despite this, assets of this kind won’t be ring-fenced during the course of divorce proceedings, and may still be considered by the Court when deciding how the future needs of both parties can be met fairly.

Be careful what you purchase with your winnings

A Lottery win could be viewed by the Courts, as being ‘matrimonial’ and therefore open to being shared via a settlement, if the stake was paid from joint funds.  It would also potentially consider this the case if the winnings were used to purchase assets in the joint names of the couple or, if the assets are registered solely in the name of the Lottery winner, the money was used to purchase an asset shared by the couple, such as a family home.

This is a fairly good description of what transpired in the case of S v AG (Financial Remedy: Lottery Prize) [2011] EWHC 2637 (Fam), which involved a Lottery win and a married couple, and clearly illustrates the complexities of trying to separate a Lottery win from wider assets.

In this case, the wife of the couple received £500,000 from a Lottery syndicate win in 1999 and used £300,000 of this money to purchase a property to be the family home, although only for a relatively short period of time.

Complications arose post-divorce, when the wife claimed the couple had in effect, been ‘separated’ since 1996, long before the Lottery win.  She also claimed the house had not been purchased with Lottery winnings but with money borrowed from another syndicate member.  Both of these claims were firmly rejected by the High Court.

The judge was being asked to decide whether Lottery wins should be viewed as matrimonial or non-matrimonial assets and Mr Justice Mostyn decided the initial Lottery win had been non-matrimonial, on the grounds that the husband had no idea his wife was using her own money to enter the Lottery.

However, he concluded that the purchase of a marital home converted the assets into matrimonial property and open to being considered under the principle of fairly sharing the assets of a marriage.

Not all divisions are necessarily equal

The fact that the (non-matrimonial) Lottery prize money was used to fund the purchase of the home, coupled with the short period when the husband lived there, meant that the judge didn’t feel an equal division of the assets would be fair.

The Court ordered that the husband be awarded a 15-20% share of the property’s worth.  At the time of the trial, the property was valued at £480,150 and the judge applied the principle of meeting the needs of the parties and of sharing assets fairly to grant the husband a lump sum award of £85,000.

The decision did represent a small shift away from the ‘sharing principle’, in that it ring-fenced a portion of assets which were viewed as having been acquired through the efforts of one party, even though, in this case, those efforts amounted to the cost of a Lottery ticket.

What the case illustrates most clearly is the complexities that arise when a chance event such as a Lottery win clouds the issue of matrimonial and non-matrimonial assets post-divorce, how quickly the status of those assets can change, and how much the details of any settlement still rest in the nuanced interpretation of a particular Court at a particular time.

If you would like to explore all possible solutions to achieve an amicable divorce and help deciding whether you have matrimonial or non-matrimonial assets, then please get in touch with Mike Vale, a Family Law Consultant here at Ansons on 01543 267236 or email mvale@ansonssolicitors.com

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