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Gift exchange: When is a gift considered marital property?

Couples in New Orleans contemplating divorce can quickly discover that the process of property division can be more complicated than they anticipated. Louisiana, like a number of other states, is a community property jurisdiction. This generally means that both spouses share equally in the income, debt and assets acquired by either of them during the marriage.

There are exceptions, of course, in which income or property can be separate and owned by one spouse alone, but the exceptions are rare and can be difficult to define. For the most part, the property and assets acquired throughout the course of a marriage will be split equally among divorcing spouses. What happens with gifts, though? Are they property of the marriage or the recipient?

When it comes to gifts, the situation can get a bit tricky. Some courts in community property states have ruled that gifts of jewelry and other personal items may be the separate property of an individual spouse. This can override the general presumption that everything acquired during the marriage is community property, to be divided up in equal portions once the marriage ends.

One major stipulation is if a gift is quite extravagant. For example, a very wealthy person may realistically gift an expensive piece of jewelry to his or her spouse without it affecting their finances significantly. In this case, the item would typically belong to the recipient of the gift.

However, if a couple is much less wealthy, that same piece of jewelry is more likely to be considered substantial in nature. Therefore, the extravagant gift would likely be considered to be marital property. Some gifts can be ruled as separate property automatically if that intention is expressed in writing at the time the gift was given.

Property division can be the most difficult part of a divorce, as each spouse likely wants to protect his or her future and finances. Because there are so many grey areas and exceptions when it comes to gifts and other types of assets, a person who is getting divorced will want to consult with an attorney.

Source: The Huffington Post, "When A Gift Is Not A Gift," Warren R. Shiell, Feb. 15, 2012

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