What Happens to Gifts from Parents in a Divorce?

Please Note: Our practice focuses on cases that occur in New Jersey.

While many items can have sentimental value, for many people, some of their most prized possessions are gifts received from their parents. Gifts from parents can also be used to transfer wealth down through the generations, and gifts of cash and investments, assets held in trust, and inheritances can all provide financial stability for decades to come.

But, what happens to gifts from your parents in a divorce? New Jersey is an “equitable distribution” state, which means that couples’ marital assets are subject to distribution during the divorce process. Does this mean that your spouse is entitled to half of everything? If so, is there anything you can do to protect gifts from your parents?

Gifts from Parents: Separate or Marital Assets?

In many cases, gifts from parents will not be subject to equitable distribution in divorce. While couples’ marital assets are subject to distribution, gifts will often qualify as “separate property,” and this means that they remain the sole property of the recipient spouse. Gifts that qualify as separate property include:

• Gifts received prior to the date of marriage
• Gifts received during the marriage that were made to a single spouse
• Gifts received by a single spouse through inheritance

In other words, if you received a gift from your parents at any time and it was clear that the gift was made only to you, the general rule is that the gift will qualify as separate property.

However, there are two notable exceptions to this general rule. First, if gifted assets are commingled with marital assets, then the gifted assets may be treated as marital property. This most commonly occurs where a cash gift is deposited into a joint savings, checking, or brokerage account. Second, if a gifted asset (such as a summer house or investment property) is improved during the marriage through the use of jointly-owned funds, this can convert the gifted asset into marital property as well.

When seeking to establish a gift as separate property, documentation can be key. While it is always possible that your spouse will recognize a gift from your parents as separate property during amicable divorce negotiations, if you need to prove your rights, it is helpful to be prepared. This can include everything from pre-marriage bank statements and property deeds all the way down to emails and text messages; and, when seeking to protect your valued possessions, you do not want to leave any stone unturned.

Protecting Gifts that Qualify as Marital Assets

What if a gift from your parents qualifies as a marital asset (either due to commingling or because it was given to you and your spouse jointly)? Is there anything you can do to make sure you keep it following your divorce? Potentially, yes.

For most couples, a divorce is a negotiation. This is particularly true with regard to the distribution of marital property. Just as you have assets you wish to keep, your spouse likely has assets he or she wishes to keep as well. Assuming you have sufficient assets to still affect an equitable distribution (i.e. you have marital assets that are substantially equal in value to your summer home), one potential outcome is that you and your spouse will agree to a split that allows you each to keep the assets that matter most. Of course, you can go to court to fight for your gifts as well; but, in most divorces, this is only a means of last resort.

Speak with a New Jersey Divorce Lawyer in Confidence

If you would like personalized legal advice about protecting gifts from your parents in a divorce, we encourage you to contact us for an initial consultation. To speak with an experienced divorce attorney in confidence, please call (201) 880-9770 or tell us how we can help online today.

Carrie S. Schultz, Esq. – author

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