Most people think of marriage and divorce as binary options: After getting married, you are either married or divorced. But there is a third option: legal separation. And while many see it as just a stepping stone to divorce, it is a distinct relationship status that can come with its own protections, rights, and complications.
One of those complications is how to treat assets acquired by one spouse after a couple has separated. Should it be considered marital property to be split if the couple later gets divorced? Or should it remain the property of one spouse alone? The importance of this question was recently highlighted by a case in which a man won the lottery after separating from his wife.
According to news reports, a Michigan man had been separated from his wife for about two years in 2013 when he won $39 million (after taxes and deductions) playing the lottery. The couple eventually got divorced through arbitration, and the arbitrator ruled that the man’s wife was entitled to about $15 million of the winnings. The decision was appealed, and an appellate court recently upheld the original decision. When all is said and done, the husband will still keep about $24 million.
Because this story was shared in a news report, many of the details about the couple’s situation were omitted, along with the specifics of Michigan law. The outcome in a similar case could look very different here in New Hampshire or any other state, because each state has unique rules for the classification of property obtained during legal separation. Most of the time, the minutiae is not nearly as consequential as it is in this case.
Although most of us will never win the lottery, this story is a good reminder that legal separation is a distinct relationship status governed by specific rights and responsibilities. It can serve as a bridge to divorce, a strategic alternative to divorce or leave the door open for reconciliation.
If you want to learn more about divorce and legal separation options, please contact an experienced family law attorney in your area.