In October, the US was gripped by lottery fever after the largest ever Powerball jackpot of $2.04bn went up for grabs. One lucky ticket holder in California matched all six numbers. If they opt for a cash lump sum payout (rather than payment over a lifetime) they will bank $997.6m before taxes. Excitement was such that the retailer selling the winning ticket was himself rewarded with $1m. Sadly, in the UK we can only dream of winning such riches, but the Euromillions jackpot has nonetheless made some hefty payouts. As recently as July 2022, Euromillions paid out its largest-ever UK winner with a princely £195m. With such large sums, people often say they will help family and friends if they win. However, what if a lottery win lands in the middle of a faltering relationship and one is not in the mood to share?

Non-matrimonial asset Vs Matrimonial asset

There has only been one reported case in recent years concerning a lottery win and it did indeed land in an unhappy marriage. In S v AG (Financial Remedy: Lottery Prize) 2011 EWHC 2637 (Fam), Mostyn J determined that the £500,000 National Lottery win was not matrimonial property but elements of it could be shared. The marriage had been unhappy for a while and the wife had been playing the lottery in secret, buying tickets with her own earnings. She did not tell her husband about her win but did use the monies to buy the matrimonial property, in which both lived for a short period before separation. By buying the house, the wife converted a non-matrimonial asset (the win) into a matrimonial asset (the family home). As the win was substantial, but not huge, and as it was determined the husband needed an £85,000 lump sum, the wife was ordered to pay that sum to him but was able to retain the bulk of the win thereafter. Mostyn J considered that as the matrimonial property had originated from a non-matrimonial asset, and the benefit had only been shared for a short period, equality would not be fair. It is not known how the outcome would differ if the winning ticket had been bought from a joint account with the husband’s knowledge; or, if the husband had not needed a lump sum.

There are a number of interesting aspects to a lottery win that can come to be decided upon separation or divorce. A common argument is that whoever bought the ticket should have the bulk of the money. Rather than the win being treated as a windfall for the benefit of both, one of the couple exiting a marriage may try and argue that as they went to the effort of buying the ticket, the money by rights is theirs. It is factual that a win can randomly fall to one of them, if that person happened to be the person who was in the corner shop or petrol station and bought the winning ticket. If there is enough evidence, whether documented or anecdotal, to show that buying lottery tickets was simply part of family life, it will be difficult to assert that the money only belongs to one. Further, if a couple go on to jointly invest the money and conversations about what to do with the money take place with both present, it follows that the money is already considered by both to be matrimonial property.

It is hard to imagine a scenario where the court would deviate from this principle on such facts, particularly if the win is before the couple are contemplating separation. Where a windfall is received into a marriage it is, by nature, unexpected. More likely than not, although the court will consider the source of funds relevant, the matrimonial legislation gives a broad discretion to share plentiful monies after need has been met. The position is potentially more convoluted if a couple have separated but have yet to divorce. This would technically be a post-separation windfall and could, arguably, be ring-fenced by the recipient if there are otherwise sufficient marital assets to meet needs.

What happens if you are not married?

As an aside, the position can be very different if the couple are unmarried. Without the protection of broad spousal claims, it could well be that the winner does retain the bulk of the win as their own asset. Cohabitation laws, such as they are, do not provide for capital claims between cohabitees. If there is a minor child, housing, income or capital claims could be pursued under Schedule 1 Children Act 1989 with potentially more success. Even then, however, housing assets would revert to the winner once the child turned 18. 

If a jackpot is won during divorce proceedings, there is an inherent duty to disclose such a win. If it only becomes known after the divorce that one of the couple has won the lottery but failed to disclose it, this would offer reasonable grounds to revisit the settlement likely on the basis of fraud. A canny person might not claim their win until the end of the 6-month claim period, hoping to put some distance between separation and a windfall. However, the relevant date is not when they claim the money, but when they became aware of the win - from that moment it is within their knowledge that they are richer than is being disclosed.

If a jackpot is won after a clean break financial Order has been made, the jackpot is the winner’s to keep. If divorced but without a financial Order, the ex still has a technical financial claim to pursue against the winner. I unfailingly find this a very persuasive argument to encourage a client prevaricating over the agreeing of a financial Order. It seems we all like to daydream about winning big…