Property distribution is one of the most contentious issues couples face when divorcing, as each party’s hard-earned assets are on the line. This is primarily an issue because it can be challenging to distinguish marital and separate property, especially when sorting out gifts and inheritances. If you’re concerned about keeping the gifts you receive before or during your marriage, it’s in your best interest to contact an experienced Nassau County Property Distribution Lawyer who can help you protect your assets. Please continue reading to learn how gifts are handled in a New York divorce.
How Property Is Divided in a New York Divorce
New York, in accordance with New York Domestic Relations Law § 236, is an equitable distribution state. Under this system, the court must divide a couple’s marital property as fairly as possible, as opposed to an automatic even split of assets. Additionally, each spouse’s financial situation, as well as their domestic and economic contributions to the marriage, will be considered when dividing assets.
Equitable distribution only applies to marital property, not separate property. As such, separate assets will remain the property of the spouse who owns them, since they are not subject to distribution during a divorce.
Factors the Courts Consider in Equitable Distribution
- The duration of the marriage
- The age and health of both spouses
- The standard of living during the marriage
- Each spouse’s income
- The education and earning capacity of each spouse
- Any alimony or child support awards
- The tax consequences to each spouse
- Each spouse’s financial obligations and debts
- Any other relevant factors
Are Gifts Considered Marital or Separate Property in New York?
Most gifts are considered separate property in New York, even if they were received during the marriage, though there are scenarios in which an asset may be commingled and become marital property. As such, it’s important to understand the exceptions to this rule, as it may result in a gift losing its protected status.
Generally, the property classification of a gift will depend on intent, ownership, and handling of the property after receipt.
Gifts That Are Usually Considered Separate Property
- Gifts given to one spouse by a third party
- Birthday, holiday, or personal gifts addressed solely to one spouse
- Inheritances left exclusively to one spouse
It’s also important to understand that, in order to remain separate property, the gift must be kept separate from other marital assets.
When Gifts Become Marital Property
A gift may be divided, however, if:
- It is jointly addressed to both spouses
- It was used for marital purposes, like home improvement
- It cannot be traced as separate property
- It was commingled with marital assets (like being deposited into a joint account)
How Interspousal Gifts are Handled in a New York Divorce
While gifts given solely to you by friends or family are generally considered separate property, presents exchanged between spouses, called interspousal gifts, are typically treated as marital property. This is because the value of the property can still be included in the overall marital estate, even if it is physically possessed by one spouse.
Common Examples of Interspousal Gifts
- Vehicles titled in the name of one spouse but purchased with marital funds
- Jewelry gifted from one spouse to another during the marriage
- High-value gifts exchanged for anniversaries or other events
Why Commingling Is a Significant Risk for Gifted Assets
Commingling occurs when separate property is mixed with marital property. This can make it difficult, if not impossible, to determine true ownership of the asset. As such, once a gift is commingled, it can lose its separate status, ultimately becoming marital property and thus subject to distribution during the divorce.
Common Commingling Situations
- Depositing cash gifts into a joint bank account
- Using gifted funds to cover marital expenses
- Titling gifted property to both spouses’ names
- Selling a gift and mixing the proceeds with other marital assets
Commingling can permanently impact the classification of the property, and while tracing may be possible, depending on the circumstances, you may be unable to reclassify the property as separate.
How To Protect Gifts During a New York Divorce
If you are concerned about the status of gifts you’ve received during your marriage, planning, documentation, and legal strategy can help you shield these assets.
Steps That Can Help Preserve Separate Property Status
- Keep all received financial gifts or proceeds from gifted assets in a separate account
- Maintain accurate records showing the source and intent of the gift
- Avoid titling assets in both spouses’ names
- Create written agreements when necessary
Contact a Nassau County Divorce Attorney Today
If you are going through a divorce and are concerned about the impact of this process on gifted assets, it’s in your best interest to connect with an experienced Long Island Divorce attorney with the Law Office of Eyal Talassazan, P.C. Our firm understands how difficult these matters can be to navigate, which is why we are committed to helping you fight for the best possible outcome. Contact us today to learn more.
