With the recent Powerball jackpot reaching $1.5 billion, it’s no surprise that people were flocking to convenience stores across the country to get their hands on what could be the golden ticket. Although the chances of winning the huge payout were a measly one in 292 million, sales skyrocketed and drove the jackpot to its all-time record high.
Despite the tiny chance of a big payout, the lottery inevitably got people talking about how they would spend the money…buy an island, quit their day jobs, travel the world, and completely reinvent their lives.
What would you do if you were that that lucky one in 292 million winner? What implications would a win like that have on your personal life? What if you happened to be going through a divorce or had gone through one even years ago? What if you or your ex was the new billionaire? Most of these questions can be answered by looking at the relevant Minnesota laws and cases.
In this three part series we will explore:
- How lottery winnings might be divided during a divorce;
- How lottery winnings might affect a child support obligation; and
- How lottery winnings might affect a spousal maintenance award or subsequent modification.
PART 2 – How Lottery Winnings affect Minnesota Child Support Calculations
Will the lottery winnings be considered income for purposes of calculating child support?
Minnesota Child Support Guidelines are based on an income shares model, which aims to provide the child with the same level of support that he or she would have if the family had remained together. This model takes each parent’s gross income into account, and each parent pays his/her proportionate share of the Guideline amount. This amount is based on the state’s estimated cost of raising a child at the parents’ income level.
For purpose of child support calculations, the governing statute defines income as “any form of periodic payment to an individual including, but not limited to, wages, salaries, payments to an independent contractor, [and] workers’ compensation,” among others. The Minnesota Appeals Court noted in Herrley v. Herrley that “periodic” is the key word in this definition-“If the payment is periodic, it is income. If the payment is not periodic, it is not income.”
Based on this interpretation of the statute, if the lottery winning is accepted as an annuity (a sum of money paid at regular intervals), then it is to be considered income for purposes of child support. If the prize is accepted as a one-time lump sum, it lacks a periodic characteristic and may not be considered income for purposes of child support calculations.
Will the lottery winnings support modification of an existing child support order?
Deviations from the state established Child Support Guidelines are rare, but if the lottery winnings take place after the initial child support order, there may be a chance for modification.
A modification in child support requires a substantial change of circumstance of one or both of the parties that make the original child support amount unreasonable and unfair. A substantial increase or decrease in the income of either of the parties, or a substantial increase or decrease in the need of one of one or both of the parties may constitute a substantial change in circumstances. Where a lottery winning increases the income of a party, a basis for modification of a child support order may exist.
In a 2015 case regarding support modifications, the Minnesota Supreme Court held that one “can and should make a motion to modify whenever the obligor or obligee experiences a significant change in circumstances, whether upon retirement, disability, or winning the lottery.”). In addition to proving a substantial change in circumstances, the party seeking a modification must also prove that the current child support order is unreasonable and unfair based on the new circumstances. Even if one spouse wins a large multi-million dollar lottery and has a substantial change in his/her income, the party seeking the modification must still meet the burden of showing the initial order is unreasonable.
Under Minnesota law, it is presumed that the original child support amount is unreasonable and unfair if the new circumstances of the parties result in a calculated child support amount that is 20% and at least $75 per month higher or lower that the current child support order, or in instances where the current child support order is less than $75, if the new calculation results in an amount that is 20% higher than current child support order.
Simply put, the court will not mandate an upward deviation simply because the obligor has a higher income, especially where the child’s needs are adequately met by the amount determined by the Guidelines. As always, it is best to speak with a licensed attorney about the specifics of your case to determine if the facts entitled you to relief under Minnesota law.
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[1] Minn. Stat. 518A.29.
[2] Herrley v. Herrley , 452 N.W.2d 711, 714 (Minn. Ct. App. 1990).
[3] Dakota Cnty. v. Gillespie, 866 N.W.2d 905 (Minn. 2015).