In the U.S. last week, one lucky Florida resident was the sole winner in the Mega Millions lottery jackpot draw, which had a prize worth a staggering US$1.55 billion (about CDN$2.08 billion). The winner – who beat the odds of 1 in 303 million – has a choice of a series of annuity payments spanning 30 years, or else a one-time payment of about US$757 million (about CDN$1.02 million).
Few of us will ever experience the joy of receiving this kind of windfall. Even fewer of us will have to consider the question of how this kind of a jackpot gets split between spouses in the event of their separation or divorce.
In Ontario, the answer is quite straightforward: The provisions of the Family Law Act (FLA) govern how debts and assets are divided between spouses in the event of a separation or divorce – and this includes lottery winnings. The FLA says that any property that was acquired during the marriage is considered to be “matrimonial property”, and is subject to court-ordered equalization between spouses. Because lottery winnings are considered to be in this category, they are subject to equalization just like any other asset.
This means that if during the marriage one spouse bought what turned out to a winning lottery ticket, he or she may be required to share their winnings with the other spouse if they divorce. The court will consider various factors, such as the length of the marriage, the contributions of each spouse, and their respective financial needs, among others.
In some cases, the spouses may come to an agreement in advance, as to how the lottery winnings should be divided if either of them wins. This can be achieved through negotiation or mediation, or it can be included in a separation agreement or court order. But even with such an agreement in place, disagreements often arise – especially if the spouses have just recently separated and one of them hits it big. In that case, a court may be required to make a decision regarding the interpretation of any contract they agreed to.
And note there’s one important caveat to all of this: Lottery winnings that a spouse wins either before marriage, or after separation are not considered matrimonial property, and are therefore not subject to equalization.
It sounds like a simple rule, but it’s not always straightforward.
In a recent B.C. decision called Cretu v. Cretu, the divorcing couple did not agree about when they separated; this was complicated by the fact they had more than one home where they spent their time either individually and together. The husband said their separation took place in 2017. The wife claimed it was in early 2019 – pointedly after the lucky day in January 2019 when the husband won $2.7 million in a lottery. This required the court to look closely at the different proposed separation dates and some short periods of reconciliation, and then ask the question of whether the lottery winnings were “family property” at the date of separation, within the meaning of the B.C. Family Law Act.
As you see, dividing up lottery winnings in the divorce context can be tricky – but in some ways, it’s perhaps an enviable problem to have!
Full text of the decision: Cretu v. Cretu, 2022 BCSC 305 (CanLII)
