CONGRATULATIONS, YOU WON THE LOTTERY… NOW PAY UP!

For many people, winning the lottery brings happiness and opens many doors that would otherwise be closed. Sometimes, however, winning the lottery can cause confusion and litigation, such as in the context of a divorce. What happens to lottery winners going through a divorce depends entirely on the laws of the state in which they reside.

On July 5, 2013, a man residing in Detroit, Michigan, Mr. Richard Zelasko, won the $80 million Mega Millions jackpot. After taxes and deductions, his winnings amounted to $38,873,628.00. As fate would have it, Mr. Zelasko was in the middle of a divorce when he purchased the lottery ticket that won him the Mega Millions jackpot.

Prior to winning the lottery, Mr. Zelasko’s wife, Mrs. Mary Zelasko, filed a Complaint for Divorce in September 2011. After all of the pleadings were filed, the parties entered into an arbitration agreement and endured almost two years of divorce proceedings before Mr. Zelasko purchased a lottery ticket for $1.00. The key in this case, however, is that the parties were not yet legally divorced in Michigan when Mr. Zelasko won millions of dollars.

In an Order dated November 22, 2013, the arbitrator awarded Mrs. Zelasko $15 million of the lottery winnings. The arbitrator opined that the lottery winnings were “part of the marital estate” and that, “as losses throughout the marriage were incurred jointly, so should winnings be shared jointly.” Consequently, after the Final Judgment of Divorce was entered in 2014, Mr. Zelasko appealed the arbitrator’s decision citing, among other reasons, that the arbitrator exceeded and violated Michigan law when the arbitrator awarded Mrs. Zelasko half of his lottery winnings. Ultimately, Mr. Zelasko lost the appeal because pursuant to the laws of Michigan, “marital property includes all property acquired from the date of marriage until the date of the entry of the divorce decree.”

What would have happened if the same facts played out in New Jersey? There would likely have been a completely different result. In New Jersey, the date that either spouse files a Complaint for Divorce is considered the “cut off” date for determining what marital assets will be eligible for equitable distribution. Accordingly, if a party files for divorce in July and two years later, prior to the entry of the Final Judgment of Divorce, a party purchases and wins the lottery, this fortune would not be divisible between the parties because it would not be considered part of the marital estate. Conversely, if the litigant in New Jersey had purchased the lottery ticket just prior to filing the Complaint for Divorce, it is likely that the lottery winnings would be considered part of the marital estate and subject to equitable distribution.

That said, in New Jersey, even if your lottery winnings are not divisible as part of the marital estate, it does not mean that the litigation is over. For example, the court will likely take this fortune into consideration when determining alimony, as “ability to pay” is one of the key factors in deciding such an award. Likewise, a former spouse may come out of the woodwork and return to court in the hopes of modifying alimony and child support orders based on the former’s spouse’s newfound wealth through lottery winnings.

In the event that you win the lottery and are going through a divorce, you should contact a lawyer. Timing is everything and you want to make sure you that your fortune is protected. Litigants should be prepared to hire an attorney who is prepared to work expeditiously and to treat these cases with the importance that they deserve.

By Victoria E. Paone, Esq.*

* (Editor’s note: Victoria E. Paone, Esq. is an associate at the Law Offices of Paone, Zaleski & Murphy working out of the firm’s Red Bank office, located at 120 Maple Avenue. Victoria’s professional history includes clerking in Monmouth County for the Honorable Mara E. Zazzali-Hogan for both the Family part, Chancery Division and Civil Division for 2016-2017. She is currently a member of the New Jersey State Bar, Middlesex Bar Association, Monmouth Bar Association and Aldona E. Appleton Family Law Inn of Court. Victoria limits her practice to divorce, child support, child custody, equitable distribution, alimony, domestic violence, alimony, palimony and all other family law issues. Her monthly column, “Divorce Hotline,” will serve to inform readers as to family law news, advice as to the divorce process, comment on recently published family law cases and more. Paone, Zaleski & Murphy can be contacted at 732-750-9797.)