Gifts in a Divorce Case

1. Are gifts subject to equitable distribution in a divorce case? No. N.J.S.A. 2A:34-23 specifically excludes from equitable distribution all gifts received by either spouse from a third party. The third party is in most instances the parties’ parents. However, it is important to note that interspousal gifts are subject to equitable distribution. The burden of proving that an asset is an interspousal gift rests upon the party alleging the status of the property. Many disputes have arisen over whether a gift was to one or to both spouses, or whether a gift to one spouse lost its separate and immune character by virtue of being commingled with marital property – for example, by deposit in a joint savings bank account. See Dotsko v. Dotsko, 224 N.J. Super. 668 (App. Div. 1990). A typical type of interspousal gift is the conveyance of a home owned by one spouse prior to the marriage to both spouses as tenants by the entireties after the marriage. Such a gift converts what would otherwise have been separate premarital property into marital property subject to equitable distribution. See Perkins v. Perkins, 159 N.J. Super. 243 (App. Div. 1978). It is important for a spouse to keep any of his/her assets that were derived from a gift(s) separate and distinct from the rest of the marital property. Separate property that is brought into the marriage is not eligible for distribution upon divorce. However, quite frequently the spouses commingle their resources. Consequently, separate property that was a gift is often commingled with marital funds. If this should occur, then an argument can be made that the gift was converted into marital property. Cases of this nature are decided on a case-by-case basis. If possible, it is always strongly advisable to keep gifts from your parents and your inheritance separate from your spouse’s finances.