In New Jersey, understanding how courts treat assets during a divorce is crucial. A common point of confusion is whether certain property is exempt from division. Continue reading to discover whether courts divide gifts in a divorce or whether they remain separate. Reach out to a knowledgeable Morris County, NJ division of assets attorney for more information today.
What is Legally Considered a Gift?
When it comes to New Jersey marital law, a “gift” is typically defined as a voluntary transfer of property from one person to another without receiving anything of value in return. For a transaction to be legally recognized as a gift, three elements must generally be present:
- Intention: The person giving the asset must have the clear, present intent to make a gift. They must intend to permanently relinquish ownership to the recipient.
- Delivery: The asset must be actually or constructively transferred to the recipient.
- Acceptance: The recipient must accept the asset.
If these elements are met, the item is usually classified as a gift. Gifts can be given between friends, relatives, or spouses.
Do New Jersey Courts Divide Gifts in a Divorce?
Generally, New Jersey courts do not divide gifts received by one spouse from a third party during the marriage. Under N.J.S.A. 2A:34-23(h), any property acquired during the marriage through a gift, devise, or inheritance is considered separate property and is exempt from equitable distribution. This is an important distinction in New Jersey’s marital property laws.
To successfully claim an asset as exempt separate property, the recipient spouse bears the burden of proof. They must demonstrate that the asset was clearly intended as a gift to them alone through the gifter’s intent. If the asset is proven to have been given to only one spouse, it remains the separate property of that spouse and is not subject to division in the divorce settlement.
However, issues may arise if the gifted property is later commingled with marital assets or used to purchase jointly titled property. For example, if gifted cash is deposited into a joint bank account and used for marital expenses, or if it is used as a down payment on the marital home titled in both names, the separate property status may be lost. In these cases, the court may determine that the gift was transmuted into marital property, making it subject to equitable distribution.
What About Gifts Between Spouses?
Unlike gifts received from a third party, gifts exchanged between spouses during the marriage are generally considered marital property subject to equitable distribution in a New Jersey divorce.
This means that if one spouse gives the other a significant asset, such as jewelry, a car, or interest in a business, its value will typically be included in the pool of assets to be divided fairly between the parties. The law presumes that these transfers are intended to benefit the marital partnership. To exclude an interspousal gift from division, the gifting spouse would face a substantial burden of proof to demonstrate a clear intention to keep the asset separate, which is rarely successful.
