High Court’s Lottery Decision ‘Brings Divorce Asset Split Into Spotlight’

Family Law Specialist Comments On Landmark Ruling

20.10.2011

A family law specialist at Irwin Mitchell has said that the High Court’s decision to rule that a spouse has no right to the lottery winnings of their partner once again demonstrates how the ring-fencing of assets is always considered in line with the needs of those going through the divorce process.

In a landmark ruling made on Monday (October 17th), it was confirmed for the first time that a man should not be given an equal share of his ex-wife’s £500,000 National Lottery win as the money was not regarded as a “matrimonial property”.

The woman bought the ticket with her own money without the knowledge of her husband over a decade ago, so prize money could not be treated equally. It was however decided that the man should be given a partial share of the funds, as the money was invested in a property which was regarded as a shared asset.

Commenting on the decision, John Nicholson, a Partner who specialises in family law at Irwin Mitchell’s London office, said: “This decision that the spouse has no right to lottery winnings once again highlights how any kind of ring-fencing of assets is always assessed in relation to the needs of the parties and any children of the family.

“It also demonstrates how some judges in the High Court appear increasingly to be looking to separate the assets of married parties as far as possible, bringing in an approach more akin to that adopted in much of continental Europe, probably with the long-term aim of making pre-nuptial agreements easier to regulate.

“One scenario to consider is where the husband of a penniless couple wins £1 million, puts half of that into a property and keeps the rest in his name. In a divorce following that move, the judge may decide the home is the only asset which can be divided.

“However, if it is decided the wife and children’s housing need is valued at £500,000, she could receive all of the matrimonial assets, leaving the husband with his own ring-fenced assets.

“In addition, if a sizeable part of a lottery win is truly kept separate from the rest of the matrimonial finances, and is allowed simply to rack up interest untouched – and the remainder of the family assets are sufficient in whole or in part to meet the non-winning party’s needs – then the lottery win might be treated in the same way as an inheritance, or pre-acquired asset.”

John added: “It would be interesting to see what would happen in a case in which there was an argument about where the £1 stake came from. If it came from a part of one party’s earnings that were habitually never shared, that may be different from it being paid from, for example, housekeeping money withdrawn from a joint account.”