A reliable rule of thumb is that until there is a legally enforceable settlement, any money or property received after separation will be taken into account by the Court when dividing property.
One example is a lotto win. A lotto win might be hard to imagine because they are so rare. However, include in that category inheritances, asset value increases through booms and rezoning. All of a sudden we are talking about events that are not that rare at all. Nor is it rare for property to go down in value which results in a different set of problems.
In the recent case of Eufrosin [2014] Fam CAFC 191 (2 October 2014) the wife won 6 million in lotto 6 months after separation. The husband made a claim on the 6 million. At trial the Judge only awarded him one half of the non-lotto assets which were about 2.5 million in total. However, the Judge concluded that because of the wife’s lotto win the husband was in a far weaker financial position than the wife. The trial Judge awarded him an extra $500,000 having regard to Section 75(2)(b) of the Family Law Act which says that the Court must consider any disparity in the property and financial resources of the parties.
As it happens, the Eufrosin case is not a rarity.
In Farmer and Bramley [2000] FLC 93060 the parties were married for 12 years. Regretfully, there were no assets at separation, partly due to the fact that the husband had a drug problem during the marriage. About 18 months after separation the husband won 5 million in the lottery. The trial Judge said that the wife had made contributions to the children both during the marriage and afterwards. The wife was awarded 15% of the 5 million. The husband appealed.
The Appeal Court concluded that it could make an award for the contribution made by a party to the marriage. In making the award the Court found that it was not restricted to making the award out of assets acquired during the marriage. So, the husband’s appeal was dismissed and of course, the $750,000 came out of his lotto winnings.
In Farmer and Bramley the wife did not cross – appeal, so no consideration was given to whether her award should have been greater than $750,000. The decision of the Appeal Court was also not unanimous with one Judge concluding that the award should have been only $140,000.
What if the lotto win takes place during the marriage? There have been cases on that subject as well and usually the answer will be that the lotto win is shared. Such was the ruling In The Marriage of Zyk (1995) 19 Fam LR 797. However, even in that case the Court contemplated possible exceptions such as cases where the couple keep their finances separate.
One conclusion we can come to based on these cases is that just because an asset is created after separation does not mean that it is excluded or quarantined from the pool of assets.
Decisions like Eufrosin and Farmer and Bramley are discretionary. Outcomes will always depend on the facts of each case and the discretion of the trial Judge.
There are of course subtle legal differences between different types of good luck which can radically change the outcome. For example, a post separation boost in value to a family owned property is likely to be shared equally. It all depends on the origin and timing of the good fortune and the personal circumstances of the parties.
Please note that any information included in this article is general information only and does not constitute legal advice. Please contact us to discuss your particular circumstances.