Problems with Gifts From Parents Regarding Marital Assets

If a parent gives a gift to their child and their spouse, it is marital property subject to equitable distribution at a later time. If a parent gives an asset to their child, and it is contaminated by co-mingling, it may also become marital property. A gift should be to your child only and the gift must not be comingled with other marital assets.

How can you make sure that separate property remains immune from Equitable Distribution?

  • 1. Cash: Never make a gift to a child appear to be a gift to their spouse as well. Write the check to your child individually & instruct your child to keep the money in their own name in an account not comingled with the spouse’s money or “Marital” monies (money earned by either party during the marriage). Never use this money to buy an asset that will be owned by the other spouse, or jointly such as a house, other real or personal property or investments
  • 2. Mixing Funds: Never use this money to buy an asset that will be owned by the other spouse, such as a house, other real property or investments. Always maintain the asset separately & do not use marital monies to support the investment or property.
  • 3. Real Property: Deed the property only to your child. Include a specific clause that states if either of the parties commences a divorce or separation proceeding, the property will revert to the donor.

Your best defense is generally a prenuptial agreement or postnuptial agreement. Make sure the children have a binding agreement constructed by a competent matrimonial lawyer to cause the property to remain exempt from Equitable Distribution.

At KGG, our divorce attorneys have been creating prenuptial and postnuptial agreements for close to four decades and can assist you in drafting an agreement that will protect your interests.