$1.2 Billion Powerball: Virginia Lottery Winnings in Separation and Divorce

Posted on Jan 13, 2016 by Katie Carter

With the Powerball reaching a record breaking $1.2 billion, everyone (including yours truly) is out buying lottery tickets. I really think that, even though I know that the likelihood of winning is incredibly, incredibly low, the couple hours between when you buy the tickets and when the drawing is announced are worth it. Just having the opportunity to dream about winning that kind of money and all the changes that it would bring to my life (and, of course, the lives of the people I love most in the world) is diverting. It’s exciting to think about, and fun to talk about all the possibilities.
In our office, we all pulled our money together and bought some office Powerball tickets, with the theory being that if one of our numbers win, we’ll all divide the winnings equally. So we had lots of conversations about what we’d do with the money, whether our share would be “enough” (trust me, it is), and whether any of us would show up for work Thursday morning if our numbers were called. (Spoiler alert: most of us said no way.)
I’m not a regular lottery player, but when the total jackpot gets up to a killer $1.2 billion, it’s a little bit hard not to stand up and take notice. And why not participate? Like I said, it’s worth it—if only for the dream of winning it big.
Most of us don’t think it through, logistically, beyond the point where all of our numbers are called out in rapid succession, and the heady, intoxicating feeling of winning. (Or, perhaps alternatively, the overwhelmingly queasy sensation? I don’t know what it’s like, never having been there before. But I imagine that you’d oscillate a bit between extreme joy and overwhelmed nausea, if you’re at all sane.)

What happens next? Are you the only winner? A lot of times, particularly when there’s a big jackpot like this one, there’s more than one person who somehow manages to pick the winning combination of numbers.
And, even if there isn’t another person who magically manages to choose the same winning numbers as you, you may find yourself sharing your jackpot anyway. If you’re married and you win the jackpot, what happens? If you’re happily married, there’s probably not much of an issue. You take the billion, less taxes, or, alternatively, you take the annuity. Depending on what your tax advisor suggests and your decision about how much of your winnings you’re willing to pay back to the IRS, you’ll make a decision you can live with. (Either way, let’s face it—it’s a lot of money!)
If things in your marriage are less than harmonious, though, it may be entirely different. If you’re thinking about going through a divorce, or worse—you’re already separated—what happens to your lottery winnings? Is it yours—or is it marital? Can you keep it, or do you have to split it? What if it’s him who wins? Does he owe you a portion of his lottery winnings?

If you’re unhappily married

Unhappily married is, for the sake of this question, the same thing as perfectly happy. As long as the two of you haven’t made the decision to separate, any lottery earnings are marital property. Whether you stay unhappily together or eventually decide to move forward with a divorce, the money is marital and belongs equally to the both of you.
In divorce, it would later be subject to equitable distribution (in Virginia, that’s the fancy legal word we use to describe how property is divided) and ultimately divided between the two of you. If you stayed together, it would likely stay in a joint account, where you’d both spend according to whatever budgeting scheme you established together. (Though I would suggest you employ the services of some kind of wealth manager or financial planner to help make sure you avoid bankruptcy later—a phenomenon which, surprisingly enough, seems to strike lottery winners, even big time lottery winners, with surprising frequency.)

If you’re separated


Technically speaking, once you and your husband have separated, anything that you earn, purchase, or acquire is yours separately. This principle would certainly apply to lottery winnings. If the two of you are separated and you win the lottery, it’s likely your separate property. Likewise, if you’re separated and he wins the lottery, it’s likely his separate property. It’s only fair if you’re the one who wins. Right?

So, when ARE you separated?

In Virginia, you’re separated at the point when one of you decides that you no longer want to be married. It only takes one of you to reach that decision. Then, once you decide that you want to end the marriage, you stop cohabitating.
Cohabitating is a word we use to describe when a couple is living together as husband and wife. You live together as husband and wife when you sleep in the same room, have sex, cook and clean up after each other, wear wedding rings, attend church or other functions together, exchange gifts, celebrate anniversaries, and so on. There are a lot of factors that determine whether you are cohabitating, but, generally, it should be fairly easy to tell.
If you’re living in separate rooms, even if you’re still living in the same home, you could be separated. Ask yourself—would I behaving the way I am behaving if we were perfectly happy? Or are we making choices that are ultimately going to lead us to divorce? Ideally, you’d stop doing all of the things that constitute cohabitation (see paragraph above for guidance about what that includes), but rarely is a separation quite so nice and neat. For more information about separation and separation under the same roof, click here.
Are you living the way you would if you were living in entirely separate physical spaces? Are you thinking about divorce? Chances are, if you’re tempted to answer “yes” to any of those questions, you’re separated.

What if we reconcile?

If you and your husband reconcile after you win the lottery, it may become a marital asset again. I think that would likely all depend on the circumstances, though.
If you “reconcile” temporarily and then separate again quickly, there may be an issue of proof in court. It’s not enough just to say that the two of you had sex again (in fact, courts have heard separation cases like this before, though not connected with lottery winnings, and found that sex isn’t a major determining factor when it comes to cohabitation, since so many unmarried people have sex and so many married people don’t); you’d really have to have a good faith reconciliation, I think, to be able to prove to a court that you actually reconciled.
Of course, proving that you’ve reconciled won’t matter one whit if you truly do reconcile and then go on to live happily ever after. This would really only come up if you reconciled and then later separated—a much messier proposition. In the case of a $1.2 billion jackpot, I think it’s likely that you’d find yourself in court, fighting over whether you actually reconciled.
This type of case would be very dependent on the facts, so it’s difficult to say whether a judge would find that you reconciled or remained separated.
If you’ve bought Powerball tickets, good luck to you! If you’ve got any other questions about marital or separate property, separation, or just want to schedule a consultation with one of our licensed and experienced Virginia divorce and custody attorneys, give our office a call at (757) 425-5200.