Characterization of Gifts and Bequest during Marriage in Divorce Cases

Characterization of Gifts and Bequest during Marriage in Divorce Cases

Generally, property acquired during the marriage are considered community property. However, property acquired by “gift, bequest, devise, or descent” are the acquiring spouse’s separate property. The issue becomes more complicated when a gift is given under the name of both spouses. In that situation, the community property joint presumption kicks in which presumes an acquisition by the spouses during the marriage in “joint form” as community property under Family Code Section 2581. In such situations, it is important to look into evidence of the intent of the donor and the parties mutual understanding. At the very least, the gift becomes a reimbursable separate property contribution. Therefore, it is important to evaluate the intent of the parties and the underlying circumstances when faced with what the other spouses characterizes as a “gift.” Any rents, issues, and profits of the gifted property are also considered separate property of the donee spouse.

What happens when one spouse is gifted by a parent or family member a down payment for a house which is purchased in joint form by the couple during the marriage? In that situation, there is a community property presumption based on the joint form of the title that is rebuttable. This may be rebutted by agreement to the contrary or by other instrument of title. If this presumption is not rebutted, the home must be characterized as community property at marriage dissolution or legal separation subject to the spouse’s tracing right of reimbursement for separate property contributions to principal, equity, or improvement..

If the community property title from joint title is rebutted, then the interest in the house may be apportioned between community property and separate property based on the ratio of the separate down payment to the purchase price of the house. The remaining interest shall be community property if the loan is based on community or joint obligation. In doing this analysis, its important to determine the intent of the lender in providing the loan before characterizing the loan as community obligation. The divorce process becomes complicated when the community involves assets purchased using both separate and community resources. It is best to retain the assistance of competent counsel with these type of cases.

Please note that this article is not legal advice and is not intended as legal advice. The article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. This article does not create any attorney-client relationship between you and the Law Offices of Kenneth U. Reyes, P.C. This article is not a solicitation.

Attorney Kenneth Ursua Reyes is a Board Certified Family Law Specialist. He was President of the Philippine American Bar Association. He is a member of both the Family law section and Immigration law section of the Los Angeles County Bar Association. He is a graduate of Southwestern University Law School in Los Angeles and California State University, San Bernardino School of Business Administration. He has extensive former CPA experience prior to law practice. LAW OFFICES OF KENNETH REYES, P.C. Los Angeles main office is located at 3699 Wilshire Blvd., Suite 700, Los Angeles, CA, 90010. Tel. (213) 388-1611 or e-mail kureyeslaw@gmail.com or visit our website at Kenreyeslaw.com; Orange County satellite office is located at 1851 E. 1st St., Suite 900, Santa Ana, CA 92705.