Disclose It Or Lose It

Recently an ex-husband discovered his ex-wife won a California lottery of $1.3 million during their marriage. Ex-wife filed for divorce only 11 days after winning the lottery and did not disclose her lottery winnings among her assets in the marital settlement agreement, in the judgment or in her disclosure statement.

The trial court found her actions of nondisclosure constituted “fraud, malice and oppression and a breach of her fiduciary duty.” In accordance with Family Code section 1100(e), each spouse has a fiduciary duty to make a full disclosure to the other spouse, of all material facts and information, regarding the existence, characterization and valuation of all assets in which the community has or may have an interest, until such time as the assets and liabilities have been divided by the parties or by the court.

As a result of her nondisclosure, the court awarded her entire winnings to the ex-husband. Authority to do so comes from Family Code section 1101(h), which allows the court to award 100 percent of the value of the asset to the spouse who was entitled to know of but was not notified of the asset because the other spouse failed to disclose it.

Wife stated that she did not disclose the lottery winnings because she felt it was her separate property. The lottery ticket was a gift purchased by her friend. Wife also contends that she believed she was separated from her husband since 1994.

Husband contends he was surprised when he received the divorce papers in 1997, and was not aware of any problems in the marriage. In his mind, he was not separated from his wife. He learned about the lottery when he received a solicitation letter addressed to her but delivered to him. He contacted the California Lottery Commissioner and confirmed that his wife was a winner.

She plans to appeal the decision.