18 May Are Gifts Received during Marriage considered Marital Property during Divorce?
It’s common for parents, grandparents, and other relatives of the older generation to give their children gifts over the course of their lives. Beyond being an expression of their love and allowing them to take satisfaction in helping you get established in life, these gifts also provide them with important estate planning benefits. As a result, these gifts can be quite valuable, especially if you have some wealthy relatives.
But what happens to the gifts that were given during your marriage if you eventually go through a divorce? Unfortunately, there’s no straightforward answer to this question. There are a wide range of scenarios for how the court may distribute these gifts as part of property division.
New Jersey’s equitable distribution laws state that “all property, real, personal, or otherwise, legally or beneficially acquired during the marriage by either party by way of gift, devise or bequest shall not be subject to equitable distribution, except that interspousal gifts shall be subject to equitable distribution.”
The final clause of this statute means that gifts given to your spouse during the marriage (such as for birthday presents or anniversary gifts) will be considered marital property and subject to equitable distribution. However, it gets a lot murkier when evaluating gifts from third parties, such as your relatives.
The following is a rough guide to how the court typically treats these third party gifts when dividing property during a divorce:
- Monetary gifts given directly to you — If a relative gives you a check for a large sum of money and you place it into an account that is in your name only, this gift will be considered separate property and will not be subject to equitable distribution.
- However, if you place that check into a joint account with your spouse, it becomes marital property and will be split equitably during the divorce.
- Gifts given to both spouses by parents — It’s common for parents to give gifts to you and your spouse as a couple. In many instances, they’ll try to claim that these gifts were only meant for their child when a divorce action is filed. In these cases, the court will consider when the gift was given and how it was used (if it was a monetary gift) in order to determine whether it is subject to equitable distribution.
- Contributions to your child’s college education — It’s common for grandparents to put aside money for your children’s college education. In most instances, the court will determine that this money should “come off the top” before ruling on how much each parent is responsible to provide for college expenses. It’s much less common for this money to count only towards one parent’s financial obligation for college expenses.
- Repeated gifts that impact the marital lifestyle — This may be the trickiest issue to resolve. It commonly occurs in situations where one family is very wealthy and provides regular gifts (often for estate planning purposes) which improve the standard of living to which you would otherwise be able to enjoy. While these gifts aren’t considered marital property and don’t count as assets that would be included in equitable distribution, they may impact spousal support obligations since the purpose of alimony is to help both spouses maintain the standard of living to which they’ve become accustomed.
Keep in mind that a gift won’t necessarily be split equally between you and your spouse just because it is considered to be marital property. The doctrine of equitable distribution states that property will be divided fairly and equitably, which doesn’t always mean equally. Jeffrey M. Bloom can help you navigate this process to make sure your gift is divided in the proper manner. The more information you can provide regarding the circumstances surrounding the gift, the more likely you are to receive your fair share.
If you need help with a divorce matter, please contact the Law Offices of Jeffrey M. Bloom using the form at the top of the page or call (855) 208-3650 today to schedule a consultation. Mr. Bloom serves clients in West New York, and throughout Hudson County and Bergen County, New Jersey.