In Detroit, Michigan, a man who won more than $30 million in a lottery windfall was ordered to split his jackpot with his ex-wife. The reason why? As it turns out, timing is everything when it comes to what happens to lottery winnings in divorce.
The man, Rich Zelasko, bought his winning Mega Millions ticket in 2013. At that time, he and his wife Beth had been separated for two years, but were not yet divorced. When the couple finally entered divorce arbitration, the $30 million lottery payout was determined to be martial property, based on when Rich’s winning ticket was purchased. Upon appeal, the courts agreed that Rich needed to give Beth her $15 million split, citing that “marriage isn’t over until it’s over.”
The Zelaskos were from Michigan, but what would have happened if the same scenario played out in New Jersey? Can a spouse be forced to split their winnings in divorce as part of marital asset division?
The answer, again, is all about timing. In New Jersey, the date either spouse files for divorce is considered the “cut off” date for determining what marital assets will be eligible for equitable distribution. For example, retirement accounts that are subject to marital asset division will be divided based upon how much they were worth as of the filing date for divorce.
The court filing date essentially “stops the clock” on marital asset accumulation: If one spouse officially filed for divorce with the courts on June 30 and then purchased a winning $50 million Mega Millions or Power Ball lottery ticket on July 1, this money would be generally be clear of asset division, unless some extraordinary factors were present, such as a previous agreement between lottery playing spouses to split any winnings.
In Michigan and many other states, there is no hard and fast cut off date for establishing martial property. In Michigan, “marriage begins with the wedding and continues until a judgment of divorce, regardless of when the parties cohabited or separated. Even property received after a judgment may be marital if it was earned before the divorce.” (Michigan Family Law ICLE)
It’s important to note that if the winning lottery ticket was purchased during a marital separation, but before either spouse filed a Complaint for divorce, the New Jersey courts would almost assuredly qualify the lottery winnings as marital property.
Lottery Winnings Used in Calculating Alimony & Child Support
So your lottery winnings were won safely after your divorce filing date. Is it time to kick back and start planning a luxury trip to the Bahamas? Not so fast. Even if your lottery winnings are safe from asset division, it doesn’t mean that your new riches won’t come into play in others ways in your divorce. Your former spouse can still make a claim for higher alimony and more child support based on your new wealth status.
Courts base alimony on your income and your ability to pay; child support also factors in changes in parental income and high net worth. If you take your winnings in a lump sum and invest it, and the investment produces income, the courts will consider this when calculating child support and alimony. If you accept your lottery winnings in the form of an annuity (often common for large payouts), you will receive your winnings in incremental annual payments. This too can be considered income for purposes of calculating alimony and child support.
Even if you win after your divorce is final, your ex could take you back to court to modify your current alimony and child support orders based on your newfound wealth.
But on the flip side, also remember that if you are paying alimony to a spouse who just hit it big with the lottery, you may be in the position to have the courts terminate your support obligation.
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