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How are gifts treated during a divorce?

by | Sep 30, 2017 | Blog

Divorce rates continue to decline. An article in the New York Times reports that for the last several decades, divorces are decreasing throughout the United States. However, a decline does not mean there are not people in New York who will not have to deal with this complicated legal process. 

Most couples are aware that during a divorce, there is a division of assets. This means the court will divide money and property equitably, but many people are unsure of how any gifts are treated during this time. If a person received a gift from a third party during a marriage, then he or she will have little to worry about. 

Gifts count as separate property

For money or property acquired during a marriage, the court views it as joint property. This means during a divorce, it requires division. However, if a person received a gift from a parent or employer, then it would not count as joint property. It would remain separate, and it would not come into play. In the event the other spouse wants that piece of property, he or she may argue it was actually a joint gift and should count as communal property. 

Claim for joint property

When one spouse claims a gift was actually made to both people, it is up to the recipient to prove that is not actually the case. For example, a spouse may argue a gift of $20,000 from the other spouse’s parents was for both of them. The recipient could provide bank records showing the money went into his or her separate bank account instead of the couple’s joint account. Additional confusion can arise if the gift became commingled with marital property. For instance, if the spouse used that $20,000 to make a down payment on a condominium the couple shared, then the condo would automatically become both of the people’s property.