Formalise financial & property matters, in case you win the lottery

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A recent case decided by the Family Court in Sydney is a timely reminder for separating couples to formalise financial and property matters after separation. In this case, the wife won $6 million on lotto six months after separation from her husband. The parties had been married for 20 years and had not legally formalised a property settlement at the time of the win.

The husband initiated Court proceedings and sought Orders providing for him to receive half of the lotto win. He argued that the wife had purchased the $59.45 winning ticket from “joint funds” and that throughout the marriage, the wife had bought weekly lotto tickets from joint funds, thereby increasing her chances of winning the major prize.

Judge Stevenson rejected the husband’s argument and found that the husband made no contribution to either the funds used to buy the ticket or the lotto win. But before the wife could breathe a sigh of relief, the Judge went on to make Orders giving the husband an additional $500,000 to address the now large disparity between the parties’ respective financial circumstances, and the husband’s limited future working capacity.

Some might say that the wife was not hard done by in forfeiting $500,000 from $6 million. However, had the parties legally formalised a property settlement before the lottery win, the wife’s lottery win would have been safe from the husband’s claim and the winnings could have remained entirely hers – making it a case of bad luck for him. The ‘take-home message’ for separated couples here is to get your financial and property affairs in order. You never know what tomorrow may bring!

This is also the case where parties reach an informal agreement but do not have it formalised legally. Your ability to rely upon the fact that you have already “done a deal” with the other party may not prevent them from making a claim against you in future – whether you have a lottery win or not. They may claim against any new or existing asset you own, be it real estate, superannuation or a business. Some time limits do apply to the bringing of a claim after the end of a relationship.

Once a property settlement has been finalised by way of Court Orders or a Financial Agreement, it is final. The Orders or agreement can only be set aside in limited circumstances.

Windfalls, compensation payments and inheritances may be captured in the asset pool to be distributed between separated parties, even where the funds may be received after separation. This is because the asset pool is comprised of all assets of the relationship – including assets held in sole and joint names and the asset pool is taken from the date of the Court hearing.

When making Orders for property distribution at the end of a relationship, the Court considers the asset pool, the contributions by each party to that asset pool (both financial and non-financial) and the future needs of each person. In the above case, despite the fact that it was held that the husband had contributed in no way to the lottery win, the husband received an additional payment to take into consideration his future needs as compared to the wife.

If you are considering a property settlement, or you have reached an agreement with your former spouse but it has not been legally formalised, you should speak to a lawyer about the risks to you in not entering into Orders or a Financial Agreement. Our team specialises in family law property settlements and can provide you with individual and specific advice relevant to your situation.

 

Jacquelyn Curtis is a Lawyer at Dobinson Davey Clifford Simpson Family Law Specialists, 18 Kendall Lane, New Acton, Canberra ACT 2601 and can be contacted on (02) 6212 7600.

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