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Wisconsin Family Law Info

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paying child support on lottery winnings

I Hit the Jackpot! Does That Mean My Spouse or Ex-Spouse Did Too?

When someone wins the lottery, it can make headlines. When West Allis local Manuel Franco won the $768 million Powerball in April, it was big news for weeks. State lotteries are becoming a growing phenomenon, with the winnings often accruing well past the million-dollar mark. So, if you hit the jackpot, does that mean your spouse or ex-spouse did too?

Let’s talk lottery winnings and divorce. Say you’re in the middle of a contentious divorce, and the stress of it all has you on edge. You’re at the gas station filling up your car on the way home from work, and you feel like you need a win. So, you try your luck and buy a Powerball ticket. Unbeknownst to you at the time, that lottery ticket is going to make you a millionaire. The Wisconsin Lottery does the Powerball drawing, and you find out that your ticket won you the $400 million jackpot.

So, now you’re wondering – how does this big win impact my divorce?

The short answer is, those winnings are now property of the marital estate. Since Wisconsin is a community property state, the court is going to presume that your lottery winnings should be split equally. Although this may seem unfair, it is consistent with how family courts in Wisconsin split other assets (and debts) in a divorce. When considering the marital estate, the lottery winnings will go in the “assets” column of your estate, and your soon-to-be-ex will likely get a chunk.

Although Wisconsin is a community property state, that does not necessarily mean your spouse will necessarily get exactly half of the winnings. The court can unequally divide assets based on a variety of factors. From an equitable standpoint, the court could decide that it is unfair to equally divide the lottery winnings based on the fact that the ticket was purchased after the divorce action was filed. However, a recent case in Michigan found that the husband was required to pay the wife nearly one-half of his winnings under the same circumstances, finding that because he had regularly played the lottery during the marriage, the losses he incurred came from the marital estate so the winnings should be equally shared as well.

Further, the court will likely consider the “final” winnings from the lottery –even if you win a $400 million jackpot, there will be taxes and other deductions from that amount. So even though you win $400 million, it doesn’t mean your ex gets $200 million and you’re stuck having to pay the taxes and other deductions out of your share. Those should be split equally.

So, what happens if you aren’t in the middle of a divorce, but you’re paying child support to her pursuant to a court order from a prior divorce, or a paternity case? Or, you aren’t divorced yet but you still would owe child support or possibly maintenance?

In situations where you are ordered to pay child support, the court generally weighs two factors when they set child support: your placement schedule, and your income. If you’re unsure how child support gets calculated, check our other blog posts for more information on calculating child support. So now you’re asking yourself – are my lottery winnings income? Those winnings aren’t regularly recurring (if you take the lump sum payout option), and you aren’t guaranteed future lottery winnings. How can they call lottery winnings “income”?

Unfortunately for you, the court can consider your lottery winnings as income when they calculate your child support. How they consider the winnings will depend (in part) on how you are being paid your winnings – did you take the lump sum payout option, or are you getting regularly recurring monthly payments of your winnings? If you are getting the regularly recurring monthly payments, then it is more likely the court will consider that “income” because it is regularly recurring and available for child support purposes. If, however, you take the lump sum payout, then it is less clear what the court will do. Child support is intended to “equalize” the households of both parents so that the children have similar experiences (and opportunities) at both parents’ houses. The court doesn’t want one parents house to the be “fun” house with lots of expensive gadgets and fancy food, and the other parents house to be boring. Clearly if one parent wins the lottery, the standard of living at their house is very likely to increase. Whether or not the courts would award the other parent a portion of your lump-sum winnings will likely depend on the facts specific to your case. It will also depend on the amount of winnings – if you win a $10,000 lottery, the court will look at those winnings differently than a $10,000,000 win.

Even though your winnings may be included for child support purposes, they may not be included for maintenance purposes. The stated goal of maintenance under the law is to maintain your spouse at a standard of living enjoyed during the marriage. Clearly, a large lottery jackpot is far above any standard of living that was enjoyed during the marriage. There is a case in Wisconsin where the appellate court found that a post-divorce lottery win should not necessarily be grounds for an increase in maintenance to the other spouse for that reason.

The worst thing you can do, however, is to try to hide your winnings. Any time someone tries to hide assets during a divorce, the court could penalize that person by awarding the entire asset, or an unequal share, to the other party. After all, one-half of $400 million is still $200 million dollars!

Posts about paying child support on lottery winnings written by nelsonda

$5.3 MILLION LOTTERY WINNER HIT FOR MORE CHILD SUPPORT

When Jesse Palacios filed for divorce in January 1990, he listed himself as an unemployed truck driver with limited assets, and was therefore ordered to pay only $325 a month in child support for his two daughters.

He did not mention a $5.3 million-winning lottery ticket, and that, the Illinois Appellate Court decided Monday, doesn’t seem quite fair.

The divorce suit was filed a week after Palacios hit on all six winning numbers in the Illinois State Lottery, making him the owner of a ticket worth $5.3 million. Two months later, Judge Michael Close granted the divorce and ordered Palacios-based on his unemployed status-to pay $325 a month in child support for his two children.

Then came disclosure of the winning ticket, and the court now is taking $2,500 a month out of Palacios’ lottery checks pending a trip back to Domestic Relations Court by Palacios and his ex-wife Constance.

The Appellate Court ruled that the ticket purchase by Palacios, formerly of Chicago and now living in the Downers Grove area, was joint property. The court ordered the issue of property settlement be sent back to Cook County Domestic Relations Court.

Palacios hit on the Jan. 6, 1990 drawing, but he didn’t turn in the winning ticket until October 1990.

According to Donald Birner, the wife’s attorney, Palacios filed for divorce within a week of winning, but he made no mention of the lottery windfall.

In October, according to court records, he claimed that he was going through old lottery tickets and found the winning ticket. His former spouse argued he had hid it, hoping to keep the money to himself.

After Constance Palacios found out about the winning ticket, she asked that the case be reopened, and Close reset child support payments at $2,500 a month. The payment has been deducted from the regular lottery check on order by Close.

Attorneys for Jesse Palacios argued that the couple had been separated at various times during their marriage and previously agreed to a maintenance schedule, which they believed precluded the former wife from claiming the lottery ticket as joint property.

When he claimed the winning lottery ticket in October 1990, he was accompanied with his fiance, with whom, he claimed, he had a partnership in which she was getting 10 percent of the winnings. However, court documents indicate the fiance subsequently admitted that she and Palacios had lied about the date when they realized the ticket was a winner.

Jesse and Constance Palacios were married in 1973, were separated in 1976, resumed their marriage from 1980 to 1987, and then separated again.

In announcing the decision on Monday, Appellate Court Justice Everette Braden wrote the initial settlement was “made in contravention of both fair dealing and good faith.”

Neither of the Palacios could be reached for comment.

The Appellate Court ordered the case be returned for action to Judge Close. In Illinois, marital assets are traditionally divided equally between divorcing partners.

$5.3 MILLION LOTTERY WINNER HIT FOR MORE CHILD SUPPORT When Jesse Palacios filed for divorce in January 1990, he listed himself as an unemployed truck driver with limited assets, and was