Winning the Lottery While Separated – And Losing Half

Recently divorced couple arguing over lottery winnings with lawyer present holding paperwork

A Michigan man’s celebration of a multi-million-dollar lottery win quickly soured when his estranged wife demanded half. Although the couple had been separated for two years, the arbitrator they hired to help draft their separation agreement said Mary Beth Zelasko would receive $15 million of Dick Zelasko’s $30 million Mega Millions prize.

The arbitrator, John Mills, decided that the lottery winnings were part of the marital estate and therefore should be shared. In June, the Michigan Court of Appeals handed down a decision upholding a lower court’s ruling in favor of the ex-Mrs. Zelasko.

Could it happen here, in North Carolina? Are lottery winnings considered marital property? Is your spouse entitled to your lottery winnings in a separation or divorce?

Michigan Court Says Lottery Winnings are Marital Property

According to news reports, Dick Zelasko won an $80 million lottery jackpot in July 2013, which became $38,873,628 after taxes and other deductions. Dick and Mary Beth, who married in 2004 and share three children, had been separated for two years at the time. The Zelaskos’ divorce was final in 2018.

Richard Zelasko sought to have a new arbitrator appointed and the rulings regarding the lottery winnings being marital property tossed out. However, the trial court appointed a new arbitrator to settle only the undecided issues – not to revisit the disposition of the lottery winnings.

An appeals court decided that the trial court was wrong to appoint a new arbitrator that was not acceptable to both Zelasko, but agreed that Mills’ rulings would stand.

According to the Appeals Court decision, “The arbitrator opined that that was probably not the first lottery ticket the defendant purchased during the marriage and that, ‘(a)s losses throughout the marriage were incurred jointly, so should winnings be shared jointly.’”

North Carolina says ‘Marital’ Property Stops at Separation

If the Zelaskos had resided in North Carolina when going through a separation, the decision regarding the lottery prize would have been different. There would have been no obligation to share lottery proceeds won two years after the date of separation.

Marital property is defined as all assets acquired or earned during the marriage. Typically, marital property includes homes, cars, furniture, art, retirement accounts, pension plans, savings accounts, certificates of deposit and any other assets acquired during the marriage. Because the definition says “earned” during the marriage, it includes any assets that are paid later, such as a retirement pension or an annuity.

In separation and divorce, all marital property is subject to fair or equitable distribution between the divorcing spouses.

Here is the key difference: North Carolina, G.S. § 50-20(b)(1) defines marital property as “all real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of the separation of the parties.”

Separation is recognized in North Carolina as the point in time when spouses no longer live together.

When Do Lottery Winnings Have To Be Split With A Spouse?

woman who is recently separated and who has dark long hair in a grey suit finding out she won the lotteryIf you were lucky enough to win the lottery while married and living together in North Carolina, it’s hard to envision a subsequent separation agreement that would not require you to split the money with your spouse. In a divorce under these circumstances, lottery proceeds would most likely be split equitably between the spouses.

An equitable division of assets does not necessarily mean equal. You may be able to argue that your spouse does not deserve a share of your lottery winnings, particularly if there are other marital assets of nearly equal value being divided between you. Not all lottery prizes are multi-million-dollar payouts.

In deciding the division of assets, a judge will consider a variety of factors pertaining to your spouse’s abilities and needs, including costs related to child custody, as well as the length of the marriage, each spouse’s contributions to the marriage and any marital misconduct or fault.

You might ask whether you can just not tell your spouse if you win the lottery. In North Carolina, winners’ names are not public record, as they are in some states. You could stay quiet and keep a low profile, in hopes of keeping the news of your lottery winning off of social media. That is a risky strategy, however.

Each spouse is expected to disclose assets and debts as part of divorce proceedings. In a contested divorce, one of the tasks we take very seriously is conducting a thorough investigation to identify all of the other spouse’s assets to ensure that the asset division agreement is truly equitable. We like to think that we would find a recent lottery windfall worth a significant sum of money, no matter how well hidden. We would expect most opposing lawyers would, also.

Ask a Raleigh Divorce Lawyer About Asset Division

Front porch of Raleigh divorce law firm - Charles R. Ullman & Associates. Tan siding with red door with a window, and a plaque with the firm name. Most of us will never be faced with the issue of how to divide a multi-million jackpot. Regardless of your assets, however, a separation agreement that is not correctly drafted can be unnecessarily costly. How you divide marital assets as part of a divorce can be complex. It is important to work with an experienced divorce lawyer who will look out for your interests.

Charles R. Ullman has been a practicing attorney for more than 25 years and has earned certification from the North Carolina State Bar as a board-certified specialist in family law. The attorneys at Charles R. Ullman & Associates in Raleigh are available to help you. Simply contact us today and schedule a confidential review of your case.