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The Divorce Encyclopedia
Interspousal Gifts

Term Definition Interspousal Gifts - presents and gifts between spouses.
Application in Divorce In the happier times of marriage couples frequently convey assets to each other, and then come to fight about it later during a divorce. Courts, in dealing with these conveyances, must determine whether the conveyance came about as a result of a 1) a contract, or 2) a gift and 3) if a gift, whether it is marital (a "gift to the marriage") or separate property.

Contract conveyances normally happen when spouses enter into what are termed midnuptial or postnuptial agreements, either implied or written. These agreements are generally governed by contract law.

If the conveyance is not a contract, then the courts consider it a gift and it is generally considered in the common-law definition of a gift. That is, there must be intent on the part of the donor, delivery and acceptance by the recipient. Here the burden of proof is on the person who claims that the intent is present, which in most cases is the recipient.

This common law logic applies when the property is transferred into one name alone, but the question of a gift is more often seen when property is transferred into joint names. Here the joint title gift presumption places the burden of proof on the party who claims the transfer was not a gift. The joint title gift presumption very often comes to the fore in the question of real estate and accounts for its acquisition and improvement.

Gifts between spouses are subject to distribution in divorce, and they can become problematic depending upon the jurisdiction of the action. States are either community property or equitable distribution jurisdictions, and this can affect the way gifts between spouses are treated.

In general, the question of interspousal gifts turns on whether a gift is a gift to the marriage or a gift to a spouse. Gifts to the marriage are marital property; gifts from one spouse to the other are generally separate property. Generally gifts between spouses made during the marriage are subject to distribution because they come to be seen a marital property.

When couples marry (particularly when they marry for the first time), very often separate property becomes marital property. If Bill owns a home before he marries Bonnie and adds her name to the deed after they married by selling her the house for a dollar, he made what is termed a "presumptive gift" to the marriage, turning the homestead into marital property.

And when Bill gifts that house to Bonnie making it their joint marital property, that contribution to the marriage ("gift to the marriage," as it is called) is sufficient to warrant an unequal division of the asset in a divorce. When a court rules that a conveyance is a gift to the marriage, ownership is 100 percent marital property, not 50 percent each spouse.

Suppose Bonnie added $100 a week from her salary to a $10,000 inheritance she received in the first year of her marriage? At some point, however, Bonnie recaptioned the account from one in her name only to one a joint account. The inheritance, which was separate property, become part of a marital estate -- in effect, a gift to the marriage. The principal, Bonnie’s $100 a week contributions, and any appreciation (interest added to the principal) are marital property. (If Bonnie had kept only her name on the account, the $10,000 principal would be her property, but Bill could have a claim against a percentage of the earnings of that money during their marriage.)

But sometimes it gets harder to determine who owns the gift. If John gave Ginny a five-caret diamond as a present during happier times of the marriage, he may argue that the ring is an investment, and therefore, marital property, while Ginny contends that the gift is her separate property. If John and Ginny cannot agree, a court may have to decide for them, and judges have discretion in how they decide.

In nine jurisdictions that include separate property in the marital estate and treat such property as eligible for distribution in a divorce -- the so-called Kitchen Sink states -- gifts between spouses and inheritances can become very much of an issue. Eight other states permit such inclusion at the discretion of the court.

Community property and equitable distribution states view gifts in different ways. In community property jurisdictions, both the husband and the wife have a legal right to the property of the community, and therefore a gift to a third party is not valid unless both spouses agree to it. In equitable distribution jurisdictions, either spouse may make gifts from the martial estate until the marriage the marriage breaks down. After that, gifts to third parties, including children, may raise allegations of dissipation.

Some jurisdictions require that intent be proven affirmatively; that is, that the intent to make a gift to the marriage must be proven when it is conveyed into joint title.

See Inter Vivos.

See also Commingling; Separate Property; Kitchen Sink States; Community Property; Equitable Distribution.

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