Divorce & Lottery Winnings: How to Keep Most of It

On behalf of Ronald H. Kauffman, P.A. posted in Equitable Distribution on Thursday, May 1, 2014.

Jose is one lucky guy. He won $2 million in an Indiana scratch off lottery game. Equitable distribution requires he split half the winnings with his wife in a divorce. Last week a judge ordered him to give her less than 3%. Why?

Jose and his wife Maria were married for about 4 years – they married in 2002 and separated in 2006. They never divorced, and over the next six years he moved out, they barely spoke, had separate bank accounts, and lived as single people.

Five years later, in 2011, Jose won $2 million in a scratch-off game. He quickly filed for divorce. In the divorce proceedings, Maria asked the court to give her 70% of Jose’s winnings, about $1.4 million.

Maria thought she was entitled to a 70/30 split because Jose admitted that giving her 70% of the cash was a “fair and equitable distribution.” She argued that this admission conclusively establishes how the court should divide the money. The judge said no.

Because Jose and Maria were legally married at the time, courts presume a 50-50 split. But the Indiana court ruled Maria shouldn’t even get her half. Why? Because of the extended separation, the lack of comingling, and each person living as individuals.

I’ve written before about the risks of long separations:

* You have less control of assets,

* Spouses have an opportunity to hide assets,

* Circumstances change, jobs are lost, and people get ill or retire,

* Relocation with children may become harder over time, and

* Alimony reform is changing laws all over the country.

Jose’s case is one in which a long separation was actually very helpful, but that’s not always true. Jose just got really lucky . . . twice!

You’re not Jose. Don’t base your divorce planning on dumb luck.

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