Is a gift from a third party to one spouse liable to be divided as a matrimonial asset?
In the situation where a third party (for example, a parent), gives one spouse a gift (for example, a property), the overhanging question to ask is what will happen to the gift after divorce? Will the receiver of the gift be able to keep it or will it be liable to be divided between the spouses?
The answer depends on whether the gift was given from the third party with the intention of only giving it to one of the spouse. Even if it was only meant for one spouse, the other can argue that he/she ought to have a share in the gift as it has been transformed into a matrimonial asset.
Is it a gift meant for just one spouse?
The giver’s overt intentions at the time of purchase and the parties’ conduct after receiving the gift are relevant factors to consider. With regards to overt intention, if the giver gifted the item before the party met his/her spouse, it is quite clear that the gift was only meant for one person.
Meanwhile, for conduct, while it may not constitute sufficient evidence of the giver’s intention, it is corroborative of the court’s finding to see if the giver intended to benefit the recipient’s family. For example, if a parent gives a property to the child, and the child’s family uses the property as address in identification documents and make joint decisions regarding the property, then it may show that the gift is meant for the couple and not just one spouse.
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Has the gift that is meant for one spouse been transformed to a matrimonial asset?
There are two ways to transform the gift meant for one spouse to a matrimonial asset. First, matrimonial homes are automatically treated as a matrimonial asset. Second, all other assets besides matrimonial homes have to be substantially improved during the marriage before the other spouse may claim a share of the gift.
What happens when the gift changes form into a different property?
When the gift is transformed to a different property, it remains a gift if the party has no control over the gift’s transformation. However, if the gift is transformed with a real and unambiguous intention that it should form part of the pool of matrimonial assets, like using the proceeds from the gift to purchase gifts for the other spouse or the family, then it is no longer a gift.