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What Happens to Gifts in a Divorce?

Gift

In every marriage, there will be times when a person receives a gift from outside the marriage. Perhaps your parents gave you a personal gift of money for your birthday, or maybe your father-in-law gave your spouse a family heirloom. These individual and highly personalized gifts are sometimes the subject of a lot of argument and debate in a divorce. Thus, it’s important to understand when such gifts are considered a marital asset and when they are not.

At the Law Offices of Todd K. Mohink, P.A., we have years of experience helping couples through their divorces in Anne Arundel County and the surrounding areas of Maryland. For help determining what counts as a marital asset, call our office today.

What is the “Marital Estate?” 

First, it’s important to understand the concept of a marital estate. It can be helpful to think of a marital estate like a big pool of resources.  We start by assuming that everything belonging to both individuals is part of that pool of resources. This means the following are part of that estate:

  • All income earned in the marriage by either person
  • All income on investments during the marriage
  • Any business ownership interest built or grown during the marriage

Common Misconceptions 

A lot of people make the mistake of thinking just holding an asset in their sole name makes it theirs. In truth, it doesn’t really matter how it is titled. If you buy a home while you are married but only one person is on title, a court can still determine that the home is part of the marital estate.

What is Generally Excluded from the Marital Estate? 

Next, we look at what things can be generally excluded from the estate. Property you owned before the marriage, however, is generally excluded. Gifts are also a big exclusion.  There are two big caveats though.

Co-mingling

If you owned property before the marriage (or received it as a gift) but then subsequently mixed it with the marital estate, it loses its quality as an excluded asset. Here’s how this works. Say you had $10,000 in a checking account at the time of the marriage. If you and your spouse began depositing more money into this account during the marriage and paying your household bills from this account, chances are a judge will consider it all part of the marital estate.

Increased Values

The second exception is when a previously held asset accrues increased value during the marriage. This is often seen with retirement plans that are small before marriage but grow over time. The increased value will be subject to distribution. The same is true of gifts.

Keys to Dealing With Gifts 

Therefore, the key to dealing with gifts is to look at the nature of the gift. Is it personal in nature or meant for the married couple. Wedding gifts, baby shower gifts, and so forth are almost always marital property. Heirlooms and gifts from one’s own family are usually excluded. But just as with assets held before marriage, it is important to keep the assets separate if there are concerns.

Will the Court Just Split Everything 50/50? 

No. Maryland applies an equitable distribution approach to divorce proceedings, meaning a court will look at all the factors in determining what is appropriate. This may end up looking somewhat 50/50 in certain cases, but this is not by operation of any specific rule. Instead, the court will look at factors such as:

  • Relative income of both people
  • Earning potential of each person
  • What each person owned at the time of marriage
  • Children and custody arrangements
  • Available assets
  • Child support, if applicable
  • Debts of the parties
  • Anything else that is relevant to the court’s determination

Get Help With Your Divorce Early 

If you are facing a potential divorce, you need legal representation early. The sooner you are able to meet with an attorney, the sooner you can begin taking proactive steps to protect your interests and improve the outcome of the divorce. Call the Law Offices of Todd K. Mohink, P.A. in Maryland today for more information or to schedule a consultation with an attorney.

Resource:

mgaleg.maryland.gov/webmga/frmStatutesText.aspx?article=grp&section=14-107&ext=html&session=2018RS&tab=subject5

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