Gifts & Divorce

By: Victoria Paone Rosa, Esq.*

Christmas in July is here! In addition to enjoying holiday movies and making festive decorations, many people are looking forward to exchanging gifts (even virtually) during this annual summer celebration. Although gifts are typically the best part of any holiday celebration, they can become a point of contention in the context of a divorce case. Divorce litigants often wonder whether their spouse may make a claim to the gifts that they received during the marriage.

As with most issues in family law, the answer depends on the facts and circumstances of each case. Generally, gifts made by a third party to either spouse individually during the marriage are not considered marital property and are exempt from equitable distribution or claim by the other spouse. For example, if one spouse’s parents gifted him or her a Rolex Watch during the marriage, the other spouse would have no claim to the Rolex Watch at the time of the divorce. However, the analysis becomes more complicated when one spouse is gifted money during the marriage.

Sometimes, an exempt gift of money may be unintentionally converted into marital property and thereby made subject to claim at the time of the divorce. For example, if one spouse receives a gift of money from a third party, but subsequently deposits the gift into a jointly-titled account with the other spouse, the gift will be considered having been ‚Äúcommingled‚ÄĚ with other marital assets and will lose its exempt status. Accordingly, the other spouse will have a claim against this jointly titled-account, including amounts deposited therein as gifts. Similarly, if a gift of money is used to acquire property during the marriage that is titled in joint names, such as a house, the gift will be ‚Äútransmuted,‚ÄĚ and the house becomes marital property subject to equitable distribution. However, if money that is gifted to one spouse from a third party is maintained in a separate account, titled only in the name of the spouse who received the gift, and not commingled with any marital funds, the other spouse will not have a viable claim to the monies held in this account at the time of the divorce.

The analysis further changes if a third party makes a gift to both spouses, together, during the marriage such as a wedding gift or anniversary present. In that case, the gifts are usually considered marital property and subject to equitable distribution. Finally, and perhaps most importantly, if spouses buy one another gifts during the marriage, such as a car or jewelry, these interspousal gifts are not exempt from equitable distribution and, therefore, will be divided between the parties at the time of the divorce.
Parties going through a divorce that are dealing with the issue of gifts should seek the advice of matrimonial counsel. Depending upon the value of the gift and the facts and circumstances of the case, gifts can become an important and complex issue in a divorce case.

* (Editor‚Äôs note: Victoria Paone Rosa, Esq. is an associate at the Law Offices of Paone, Zaleski & Murphy working out of the firm‚Äôs Red Bank office, located at 120 Maple Avenue. Victoria‚Äôs professional history includes clerking in Monmouth County for the Honorable Mara E. Zazzali-Hogan for both the Family Part, Chancery Division and Civil Division for 2016-2017. She is currently a member of the New Jersey State Bar, Middlesex Bar Association, Monmouth Bar Association, Monmouth County Legal Aid Society and Aldona E. Appleton Family Law Inn of Court. Victoria limits her practice to divorce, child support, child custody, equitable distribution, alimony, domestic violence, alimony, palimony and all other family law issues. Ms. Paone was selected by the Middlesex County Bar Association to receive the 2020 Young Lawyer of the Year Award. Her monthly column, ‚ÄúDivorce Hotline,‚ÄĚ will serve to inform readers as to family law news, advice as to the divorce process, comment on recently published family law cases and more. Paone, Zaleski & Murphy can be contacted at 732-750-9797.)

‚ÄėTis the season to be generous! In the spirit of gift giving, the Law Offices of Paone, Zaleski & Murphy will send a free copy of the book Divorce in New Jersey to the first ten readers who email their mailing address to joannl@paonezaleski.com. Have a merry Christmas in July!