Many people assume that a ticket they paid for themselves belongs to them alone. In divorce law that's usually wrong. What decides the question is mostly when the ticket was bought and what state you live in, not whose cash paid for it. This is general information, not legal advice; family law differs from state to state, and a lawyer in your state can tell you how it applies to you.
Are lottery winnings marital property?
Usually, yes, under both of the systems US states use to divide property.
Nine states follow community property rules: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. They're the same nine the IRS lists in Publication 555. In these states, property acquired during the marriage generally belongs to both spouses equally, no matter whose paycheck paid for it or whose name is on it. A ticket bought with wages earned during the marriage is community property, and so is the prize it wins.
The rest of the country uses equitable distribution. Marital property is divided in a way the court considers fair, which can mean an unequal split. Judges look at factors such as the length of the marriage and each spouse's income and contributions. A prize won during the marriage still goes into the marital pot. What varies is the share each spouse ends up with.
Alaska, South Dakota and Tennessee also let couples opt into community property treatment by agreement or trust. That's a choice couples make deliberately, and it doesn't change the default rules.
Does it matter when the ticket was bought?
Yes. Timing is often the deciding issue, and the cutoff depends on the state.
- A ticket bought during the marriage is treated as marital or community property almost everywhere.
- In California, earnings and accumulations after the date of separation are a spouse's separate property under Family Code section 771. The date of separation itself is often disputed.
- Other states use a different cutoff, such as the date the divorce was filed, so a ticket bought between separation and filing can be treated differently from state to state.
- A ticket bought and won before the marriage is generally separate property, though mixing the money into joint accounts can make it harder to keep separate.
- In a community property state, a spouse who says the ticket was bought with separate money (an inheritance, for example) has to trace those funds. That's hard to do for a few dollars spent on a ticket.
What happens if you hide lottery winnings in a divorce?
The best-known example is a California case, In re Marriage of Rossi, decided by the Court of Appeal in 2001.
In late December 1996, Denise Rossi learned that an office lottery pool had won a $6.68 million jackpot and that her share was $1,336,000, payable in 20 annual installments. According to the opinion, she went to the lottery office, said she was married and considering divorce, and filed for dissolution in early January 1997. She never told her husband, Thomas, and had the lottery send checks and paperwork to her mother's address. She left the winnings off her schedule of assets and debts, her final declaration of disclosure and her income and expense declaration.
Thomas found out in May 1999, when a letter arrived at his home asking whether Denise wanted a lump-sum buyout of her lottery payments. He went back to court. The trial court found that Denise had concealed the prize fraudulently and awarded Thomas 100 percent of the winnings under California's penalty provision, Family Code section 1101(h), which allows an award of 100 percent of an asset a spouse hid through fraud, oppression or malice. The appeals court upheld the award. Denise had argued that the share was a gift from a co-worker and therefore her separate property. The court didn't find that credible and noted that the money used to buy into the pool was community property.
Other states have their own remedies for hidden assets. The general lesson is the same: concealment can turn a 50 percent share into nothing.
How are annuity payments split after a divorce?
If a prize is being paid as an annuity, the payments that remain at the time of the divorce are part of what gets divided. A court can order the winner to pay the ex-spouse a share of each payment as it arrives or, where state law and lottery rules allow, direct the lottery to split the payments. Either way, the two of you stay financially connected for years, which is worth weighing in the lump sum vs annuity choice. What happens to the remaining payments if the winner dies is covered in what happens to a lottery annuity when you die.
Two related points. Lottery prizes can be intercepted for unpaid child support before you receive them; see can lottery winnings be garnished. And claiming through a trust or LLC to keep your name private doesn't remove the duty to disclose the prize in a divorce. Our guide to anonymous lottery winners explains what those entities can and can't do.
If you win while a divorce is pending or likely
- Disclose the prize. Divorce proceedings require full financial disclosure, and the penalty for hiding an asset can be far worse than sharing it.
- Talk to a family-law attorney before you claim. The claim records dates and names that may matter later.
- Keep evidence of when you bought the ticket and with what money, if you think you have a separate-property argument.
- Don't move the money to relatives, new accounts or new entities while the case is open.
- If the ticket came from a pool, keep the pool agreement. Our lottery pool guide covers what it should say.
The steps for claiming any large prize are in what to do if you win the lottery.
Frequently asked questions
Are lottery winnings split in a divorce?
Usually, if the ticket was bought during the marriage. The prize is generally marital property, split equally in the nine community property states and divided equitably elsewhere, even if one spouse bought the ticket alone.
Can you hide lottery winnings from your spouse during a divorce?
You're legally required to disclose them, and hiding them can backfire. In In re Marriage of Rossi (2001), a California court found a wife had fraudulently concealed her $1.3 million share of a jackpot and awarded her ex-husband 100 percent of it.
What if I bought the ticket after we separated?
It may be your separate property. California treats earnings and accumulations after the date of separation as separate property, while other states use different cutoffs such as the filing date. Keep proof of when you bought the ticket and how you paid.
How are lottery annuity payments handled after a divorce?
Remaining payments on a prize won during the marriage are usually divided. A court can order the winner to pay a share of each payment to the ex-spouse or, where allowed, direct the lottery to split the payments.
Sources: IRS Publication 555; California Family Code sections 771 and 1101; In re Marriage of Rossi (2001) 90 Cal.App.4th 34.
