Three Questions That Determine How Gifts Are Divided During Divorce
You have probably heard that gifts are treated as separate properties when it comes to asset division during divorce. This isn't a given; it all depends on the special circumstances of your case. Here are some of the questions whose answers will determine how gifts are divided in your divorce:
What Is Your Jurisdiction?
Since divorce laws are enacted at the state level, your state's divorce laws are the primary determinants of what happens to your gifts if you divorce. Technically, there are two categories of states. On one side there are a handful states that use community property laws. In these states, gifts are classified as separate properties, which mean they belong to the person to whom they were gifted. Therefore, if your grandfather left you their collector's car, it is your separate property as long as you can prove the gift was solely yours.
Then there are equitable distribution property states, where gifts where a gift isn't automatically treated as marital or separate property. Rather, an analysis of the gift is made based on your unique circumstances to determine how it should be divided.
Who Gifted the Item To You?
If you live in an equitable distribution property state, then your gift may be your personal property as long as it didn't come from your spouse. Gifts from your spouse, however, are treated as marital properties. As such, gifts from your spouse are divided just as other marital properties. For example, if your partner gave you a car as a birthday gift, the value of the car will be added to your marital assets so that it can be divided (equitably, of course) between the two of you.
How Did You Use the Gift?
Lastly, the court will analyze your treatment of the gift to determine whether it is your separate property or a marital asset. Even if a gift was originally solely yours, it will be treated as a marital asset if you have commingled it with other marital assets. For example, if your parents gift you (as an individual) a car on your birthday, and you use marital funds for its insurance coverage and regular service, it's likely to be considered a marital asset and will be divided between the two of you.
In short, there is no single answer as to how your gift will be divided during divorce; it depends on several factors. If you are concerned about the division of a certain gift of yours, consult a law office like Diane Dramko, Attorney At Law for clarity on how the court may handle the issue during divorce.