The holidays are generally a time of family togetherness, merriment, and gift exchanges. Because of the traditions and hustle and bustle of the holiday season, many clients wait to seek legal services until after the holidays. Yet, it is commonly realized well before the New Year that a separation/divorce may be looming. Waiting until after the business and traditions of the holiday season allows a person to avoid potentially awkward conversations with family and muddled schedules for the holidays–after all, no one wants to complicate and introduce negativity to a time that is supposed to be filled with enjoyment and gifts. However, how might giving and/or receiving Christmas gifts (or any other gifts during the marriage) prior to separation be affected once the separation process begins?
Generally, property acquired by either spouse during the marriage is considered marital property and subject the presumptive 50/50 split many Judges enforce in litigation. However, depending on the circumstances, gifts are treated differently. There are a few nuances to be mindful of and observe:
First, gifts from family, friends or parents (even paramours which may be applicable considering we are talking about divorce) to one spouse are presumed to be the separate property of that spouse and would pass outside the 50/50 split. This presumption may be overcome if the other spouse can show lack of donative intent to just the one spouse, or that it was intended to be a gift to the marriage by the gifting party. So, in the event your soon to be ex-mother-in-law has a real soft spot for you and admits that it was a gift to the marriage under cross-examination at trial, your ex-spouse probably gets to keep the gifts from her family and friends and vice versa.
Second, in the situation where one spouse gifts to another spouse, there is the opposite presumption applied by the law that it is to be a gift to the marriage as a whole. Again, evidence to the contrary can overcome that presumption. Just be mindful to avoid saying something like “this is for you honey, no matter what, even after you leave me for the pool boy”. A practical consideration is that many people like to video record their Christmas mornings or other special occasions, so be careful not to say something definitive, like the above.
A final thought regarding marital gifts: gifting real estate. The rule regarding conveying property from one spouse to both spouses by the entireties creates a strong presumption that the land is now marital property and subject to a 50/50 division. Most people are not 18th-century French Aristocracy, so many spouses may not be looking to get their husband or wife some land for a Christmas gift. However, it’s not uncommon for a spouse on their second or third marriage to convey a deed from one spouse in real estate to both spouses. Land that is paid for, free and clear and owned outright from the bank could then be converted from separate property to marital property if it creates a tenancy by the entireties. The law presumes that the land conveyed in this way is marital property, even if it was fully paid for long before the marital relationship in question. You may overcome this presumption only by clear, cogent and convincing evidence (which is a higher burden required than in the above two situations). You may find it necessary to do so when executing a deed of trust on wholly owned property in order to gain access to liquid capital (i.e. refinance). The bottom line is that if you put his or her name on it, the characterization of the real estate as separate property at a later divorce litigation will complicate the process and often result in a windfall for the non-gifting spouse in the form of a marital interest in property that otherwise would not have been.
Gift giving is often times rewarding and provides enjoyment to see the excitement in the recipient. Receiving gifts can be just as fun and offers a sense of gratitude toward the giver. However, whether you are giving or receiving gifts this holiday season, and possibly considering separating, be mindful of who and what you are giving to whom and what gifts are given to you and/or your spouse by friends and family. Focus on quality time with your loved ones and ringing in a New Year that brings a promise of new possibilities.