Are You an Indian Giver: Understanding Gifts During Marriage

One of the hallmarks of courtship is gift giving. Like love itself, bestowing presents goes back to the beginning of time. If you look beyond our culture and century, cultures around the world have regarded gift giving as a prominent facet of marriage since ancient times. These offerings are often expensive, luxury items and jewels. Somehow, even needy and middle-of-the-road individuals often come up with the money for this. It’s important to understand how gifts are classified under the Domestic Relations Law that informs matrimonial law and during a divorce. See, DRL Section 236B: https://codes.findlaw.com/ny/domestic-relations-law/dom-sect-236

Traditionally, an engagement starts with a diamond ring – a high-end asset. If the marriage never takes place, by law, the ring reverts to the giver. If the marriage takes place, the engagement ring belongs to the recipient, even if the marital disintegration starts immediately. 

Any other gift given during the time of engagement doesn’t have the concept of necessary reversion like the ring.

By law, wedding gifts are marital. That means, presumptively, they’re split equitably in New York. When we say “equitable,” we don’t necessarily mean 50/50; different assets are often split in different allocations – but wedding gifts do tend to be split 50/50 if the parties are choosing to treat it as a marital asset.

As wedding gifts are typically bestowed to both parties in their newfound celebration, gifts from third parties expressly given to both parties during the marriage are also marital. Here, the express intent of the giver matters. If, for example, the wife’s father or best friend gives her a gift during the marriage, that would be her separate property, but if the father or best friend gives that same gift and says, “Here is for the two of you to enjoy,” the gift would be marital property. 

I have seen situations where parents will put real property in their married child’s exclusive name and gift it. The act of placing the real property in one party’s name is sufficient to demonstrate their intention to gift it to their child as separate property. Conversely, I have seen instances where parents placed real property in both parties’ names (their child and his/her spouse). In these instances, their child cannot meet the burden of proof that the gift was meant exclusively for them at the time of a divorce. They must share that real property with their soon-to-be ex as marital property. 

Inheritances are a form of a third-party gift given at a loved one’s demise. These gifts are separate property. So long as the inheriting party keeps it separate, the law honors this as separate property. Even if some commingling of it has occurred, if the inheriting party can trace it to the inheritance, they often get recoupment.

It is only natural that spouses buy things for each other, and these interspousal gifts are marital property under the law. Think of a husband who buys his wife a necklace for her birthday and a wife who buys her husband a one-of-a-kind watch for their anniversary. Those are both interspousal gifts. Their allocation, upon a divorce, is subject to equitable distribution.

Prenuptial and Postnuptial Agreements can elect to opt out of this, and designate all such gifts as separate property. The prenup/postnup can address whose separate property it is. 

Different people designate the gifts as separate or marital property based on their individual values and sensibilities. It is common for clients to say that interspousal gifts will be the recipient’s separate property, but you have people who also want to set a dollar limit, for example, they may feel that all gifts under $4,000 will be the recipients but anything over $4,000 will revert to the giver. 

Some feel that when a marriage is on the heels of divorce, and one party may have even engaged a divorce attorney, the party trying to salvage the marriage will try re-courting their spouse and lavishing them with expensive gifts to reignite endearment. Their sense of justice tells them that if a divorce happens, that expensive inter-spousal gift should revert to them if they used separate property to buy it, because their spouse was already planning on divorcing them and that last ditch effort should not cause them a greater loss. 

These sorts of nuanced permutations are common. Another example of a permutation would be that all wedding gifts will be one of the party’s separate property, because that party paid for most of the wedding. 

Helping clients feel a sense of security through prenuptial and postnuptial agreements is one of my favorite parts of practicing Matrimonial Law. 

If you would like to learn more about how your gifts and assets are classified in a divorce or to draft a prenuptial or postnuptial agreement tailored to your specific priorities, contact me to schedule a consultation.

Cheryl Stein, Esq.
The Law and Mediation Offices of Cheryl Stein
745 Fifth Avenue, Suite 500
New York, NY 10151
Phone: (646) 884-2324
E-mail: cheryl@cherylsteinesq.com