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Financial Windfall: A Joy or Tragedy

Financial Windfall: A Joy or Tragedy What to do if you win the lotto? How does the Family Court view it? A windfall is either a sizable inheritance or a lotto win. In the eyes of the Family Court, an inheritance is treated differently to a lotto win. The Family Court has great difficulty in […]

Financial Windfall: A Joy or Tragedy

Financial Windfall: A Joy or Tragedy

Financial Windfall: A Joy or Tragedy

What to do if you win the lotto? How does the Family Court view it?

A windfall is either a sizable inheritance or a lotto win. In the eyes of the Family Court, an inheritance is treated differently to a lotto win.

The Family Court has great difficulty in distinguishing a lotto win by one party as a sole financial contribution by that party to the assets of the marriage and in most cases treats lotto wins as joint contributions. That is, that if during the period of a relationship be it a marriage or de facto relationship, one party receives a sizable lotto win and that win is then applied towards the improvements or acquisition of matrimonial assets, the Court would deem that both parties have equally contributed to both the acquisition and improvement to those assets.

In one case a wife and husband maintained sole financial estates. They owned property in their respective names solely and operated their own bank accounts. The wife in that relationship purchased a lotto ticket and won a substantial prize. She argued that the lotto win came from her finances which were totally separate from that of her husband.

The Court deemed that because the ticket was purchased during the course of the relationship that it was a joint contribution and they equally shared. The lotto win became a part of the assets pool and the normal principles for a division of the net matrimonial assets were applied on the basis that the lotto win was a joint contribution to that asset pool.

It may be different if the parties are living separate lives in that they have separated but there has not been a divorce in the marriage for example. In those cases, the Court may consider that as a lotto win was obtained outside the relationship that this win is deemed or could be deemed a sole contribution by the party who won the lotto prize.


The Family Court when considering the contributions by the parties to a relationship would take into account the respective value of the contributions made by the parties and that such contributions depend entirely on the facts of the case and the nature of a Final Order by the Court. The Court has a very wide discretionary power when considering such matters.

The contributions by the parties are assessed at the date of trial and not at the date of separation. If an agreement is reached between the parties prior to any litigation in the Court and prior to any trial then the value of the contributions would be the values on the date of any agreement entered into by the parties.

The Family Court when considering inheritances and the contributions attributed to such inheritances adopt in most cases a holistic approach to a division of the assets including any inheritance received.

The relevant decision in regard to this set out the principle, “however, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represents the equity in the particular circumstances of this particular relationship. The essential task is to assess the nature, form, and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.”

How does this affect Court decisions when considering inheritance and a division of the net matrimonial assets?

In regard to inheritances, a later receipt of that inheritance during the relationship is usually given more weight than if such inheritance was obtained earlier in the marriage or relationship and therefore deemed an earlier contribution to the net matrimonial assets pool.

In a number of decisions where the inheritance was received shortly prior to or after separation the entirety of that contribution was granted to the person who was in receipt of the inheritance and the inheritance was effectively quarantined from the net matrimonial asset pool. The Court considered in one case that it was preferable to treat the inheritance as a separate asset, “that is because the inheritance was received after the separation of the parties, and the wife made no contributions, direct or indirect financial or non – financial to, its acquisition, conservation or improvement. In those circumstances, however, viewed, it is considered, the significance of the inheritance alternately turns on its impact as a financial resource of the husband pursuant to s75(2) of the Family Law Act”. On appeal, the husband was successful in keeping his inheritance out of the net matrimonial pool.

The above examples are cases where the inheritance was received shortly prior to separation or after separation. The relevance of s75(2) of the Family Law Act is the Court’s consideration of the future financial position of the parties. The inheritance is considered in these circumstances as providing a case where the husband had a resource that could be invested and provide a safe and secure future for him. Because of this the wife did not have that benefit and was given a slightly higher interest in the net matrimonial assets apart from the inheritance.

The Hudson Institute

I’m a member of a financial advising group, The Hudson Institute. I came across a recent article in the newsletter written by one of their financial advisers, Michal Park which deals with “Windfall” it is an interesting article and for this reason, I make it available to download the article in its full context.

It is interesting to note in this article, “there are some legendary stories of lotto winners squandering their winnings and ending up in a worst financial state (a common statistic is more than 75% of a windfall are squandered).”

The article then goes on to provide some handy hints as to what a person should do if they do receive a windfall and provides some advice on the investment of the proceeds of that Financial Windfall.

I have dealt with many cases where parties have squandered their winning or their inheritance. Many are left in a worse financial position than the position they were in prior to the receipt of the windfall. The windfall has led to heartbreak and tragedy, the relationship has broken down and the parties are left fighting over the assets that remain. It is heartbreaking to deal with such cases when in fact the parties if they had wisely invested their winnings or inheritances, could have lived a very comfortable life for the remainder of their relationship.

I have also dealt with cases where the parties have wisely invested the winnings or inheritances but still could not maintain a relationship with each other.

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