It’s important to understand that, when a couple files for divorce, there are a number of important considerations that must be made, especially when dividing property between the spouses. One such matter relates to gifts. Presents received during a marriage are not automatically divided during a divorce, as the court must consider the intention of the gift and how it is treated during the marriage. This process can be complicated, which is why you’ll want the help of our Morris County, NJ divorce lawyers during the property division process. If you are filing for divorce in Morris County or anywhere else in New Jersey, for that matter, understanding how gifts are handled can drastically impact the outcome of your divorce.
How Does New Jersey Divide Property in a Divorce?
In New Jersey, marital property is subject to division in accordance with the equitable distribution doctrine, as per NJ Rev Stat § 2A:34-23.1. Essentially, this means that the court will divide property based on fairness, as opposed to distributing assets automatically equally. However, courts must determine when property was obtained and whether or not it is considered marital or separate property. When a divorce is filed in New Jersey, classification of property is the first and most important step.
What Is Equitable Distribution?
Equitable distribution considers:
- The length of the marriage
- The income and earning capacity of each spouse
- The standard of living established during the marriage
- Both financial and domestic contributions
- Tax consequences of property division
- Written agreements between the spouses
- Debts and liabilities
- Any other factors deemed relevant by the courts
Which Gifts Can Be Considered Separate Property in a New Jersey Divorce?
In most cases, gifts given by a third party solely to one spouse are considered separate property. This means they are not subject to equitable distribution under New Jersey law, and they will remain the property of the person who owns the gift. However, the primary issue the courts must consider is who the gift was intended for.
When Is a Gift Protected as a Separate Property?
- It was given by a third party, like a family member or friend
- It was explicitly addressed to one spouse
- There is written evidence of intent
- The asset was kept separate from marital accounts
- The title remained solely in the name of the recipient spouse
Which Gifts Can Be Considered Marital Property in New Jersey?
While many gifts may be considered separate property, not all presents receive the same protection. As such, some gifts may become part of the marital estate, meaning they will be subject to distribution during the divorce. Under New Jersey law, gifts exchanged between spouses during the marriage are considered marital property, even if only one spouse benefits from the gift.
Examples of Gifts Considered Marital Property
- Wedding gifts for both spouses
- Anniversary gifts given to the couple
- Housewarming gifts intended for shared use
- Jewelry purchased during the marriage with shared funds
- Cash gifts deposited into joint accounts
Can Separate Gifts Become Marital Property?
As we mentioned earlier, most gifts given to just one spouse would be considered their separate property. This is almost always the case, unless they do something to combine their separate property with marital assets. Asset mingling is one of the most contentious issues in New Jersey divorces.
Common Ways Separate Gifts Become Commingled
- Depositing cash gifts into a shared bank account
- Adding a spouse’s name to a title or deed
- Using inherited money to pay marital debts
- Using gifted funds to maintain or improve jointly owned property
How Do New Jersey Courts Determine Donor Intent?
When classification is contested, the courts must consider evidence to determine what the giver’s intention was at the time the gift was made. In general, the burden of proof will fall to the spouse who claims the property is separate property.
Under the equitable distribution statute, only marital property is divided. This means all separate property, including third-party gifts, is excluded unless they have been commingled and deemed marital property.
Evidence the Court May Consider
- Written statements and cards
- Wills or trusts
- How the property was titled
- Financial records
- Whether the gift was publicly presented as belonging to one or both spouses
Practical Steps to Protect Gifts During Marriage
Though you may not be considering divorce, understanding the importance of practical planning early can be incredibly beneficial in the event you and your spouse decide to separate at a later date. This can help provide clarity and prevent disputes regarding contested property.
Asset Protection Practices
- Hold gifts in a separate account
- Do not retitled gifted property
- Retain written proof of the giver’s intent
- Consider formal documentation for large gifts
- Do not use marital funds to maintain or improve gifted assets
Divorce cases in Morris County are handled through the Superior Court of New Jersey, Family Part. Though equitable distribution laws apply across the state, local courts will consider records, documentation, and other evidence on a case-by-case basis when determining whether or not gifts are marital or separate property.
Talk to a Divorce Attorney Today
If you want to learn more about how you can protect your assets and property during a divorce, the team at Townsend, Tomaio, Newmark & Clancy is ready to help. Contact us today so we can take a closer look at your situation and let you know more about how an experienced family attorney can be of assistance.
