Importance of Keeping Gift Receipts in a California Divorce
With Valentine’s Day over, couples may have already eaten the chocolate and thrown away the flowers often associated with the holiday, but the thoughtful gifts they exchanged remain. What happens to those gifts if the holiday went poorly?
While they may have added to the romance of Valentine’s Day, gifts can lead to some unexpected legal questions during a California divorce – especially if they carry hefty price tags.
Under California Civil Code Section 1146, a gift is the transfer of personal property that a person voluntarily makes without expecting anything in return. A gift giver generally cannot take a gift back, except in limited circumstances.
In addition to Civil Code Section 1146, California’s community property laws play a significant role in how courts characterize and divide gifts in a divorce.
How do California Community Property Laws Affect Gifts in a Divorce?
State community property laws generally classify property and debt that either spouse acquired during marriage as community property, which both own equally and split 50/50 upon divorce.
However, California Family Code Section 770 considers gifts or inheritances a spouse receives during the marriage as separate property, which the recipient can keep in a divorce.
Gift from a Third Party
Courts treat a gift from a spouse’s mother, father, sibling, or friend differently from a gift the other spouse gives. Courts generally presume these gifts are separate property and exclude them from asset division.
However, if the opposing spouse claims the donor intended the gift for the couple, the spouse claiming separate ownership must prove the gift giver’s intent to exclude the item from community property. A spouse can demonstrate intent through:
- Testimony from the giver clarifying that the gift was for one spouse.
- Written evidence accompanying the gift showing that the giver intended it for one spouse.
- Circumstances surrounding the gift, such as the donor-recipient relationship, the occasion of the gift, and its delivery.
- One spouse’s name is on the title.
Gifts from a Spouse
Unlike presents from people outside the marriage, gifts between spouses that are not “tangible articles of personal nature” or that are of “substantial value” (i.e. vehicles, expensive art pieces, real property, etc.) are presumed to be community property and are divided equally upon divorce.
Family law courts may override this presumption and classify these gifts as separate property if one of the following circumstances applies:
- A signed transmutation agreement – A written agreement that changes an asset’s legal classification from community to separate property.
- Evidence of the gift’s intent – Written evidence, such as a letter, card, or receipt — may support a claim that the giver intended the gift to belong solely to the receiving spouse.
Spouses claiming the gift as separate property bear the burden of proof.
A gift from a spouse of clothing, wearing apparel, jewelry, or other tangible articles of a personal nature that is used solely or principally by the spouse to whom the gift is made is the recipient’s spouse’s separate property, unless it is of substantial value.
If the court considers the gift community property, it will treat it as any other asset.
The court may allow the recipient to keep the gift and pay an equalizing payment to the other spouse or order the sale of the item and divide the proceeds equally. The outcome varies depending on the gift type and the parties’ situation.
What is the Impact of a Prenup on Gifts in a Divorce?
A prenuptial or postnuptial agreement can have a significant impact on how courts classify third-party and interspousal gifts under California’s community property laws. The marital contracts can:
- Determine valuation methods
- Define what a gift is.
- Require specific gifts to be in writing.
- Decide how a spouse will retain gifts.
Final Thoughts
Asset division in a California divorce is a complex process, which gifts further complicate. Every situation is different. Courts rule differently depending on whether the gift is from a third-party or the other spouse.
Spouses must maintain clear documentation of valuable presents in the event of a divorce. While not romantic, written documentation that reflects the intent behind a spouse’s gift can strengthen a party’s legal positioning in a divorce.
If you are unsure of how California law will classify your gift, are interested in solely owning a specific present, or are curious about how to navigate gift division in a California divorce, contact an experienced family law attorney for guidance.
Nancy Martinez is a Family Law Attorney at Lewitt Hackman.