Classifying Estate Planning Gifts as Marital Versus Nonmarital Property

By Jackson Law Group
June 4th, 2015

Posted in Asset Protection,Probate & Trust Administration,Wills, Trusts & Estate Planning

One of the many complicated facets of planning for a possible divorce as part of estate planning is the division of property. When a marriage dissolves, property that is classified as a marital asset will generally be equitably distributed between the parties. On the other hand, property that is classified as a nonmarital asset will not.

When a couple receives a gift together, it is typically a marital asset. For example, a toaster that the couple received as a wedding gift would be equitably distributed if the marriage were to dissolve. On the other hand, if one spouse exclusively receives a gift from someone outside the marriage, this is a noninterspousal gift. Noninterspousal gifts are nonmarital property, and typically are not part of an equitable distribution. However, it is possible for nonmarital property to be reclassified as marital property if certain precautions are not taken.

If it appears from the recipient’s conduct that the noninterspousal gift was intended to become a gift to the other spouse, it will then become an interspousal gift. Once this occurs, it is a marital asset to be equitably distributed. For example, if Wife inherits a house, and Husband helps take care of the house in such a way as to increase its value, it may be considered an implicit gift from the Wife to the Husband. If so, it is now an interspousal gift that would be equitably distributed. The most common way a noninterspousal gift becomes an interspousal gift is commingling of funds. In the form of plain monetary gifts, this would occur if the Wife receives a lump sum of money as a gift, and deposits it into a joint bank account held with Husband. Commingling may still occur where the noninterspousal gift is property; for example, if the house Wife inherited has been used as a rental property and the rental income is held in a joint account, this may convert the inherited house into an interspousal gift.

However, the phrase equitable distribution may be deceiving; in a divorce proceeding, equitable does not mean equal but rather fair. Therefore, an equitable distribution need not be equal to be fair. Some factors that may be considered would justify an unequal, but fair, distribution. So even where a noninterspousal gift has remained a nonmarital asset, it may lead to an unequal distribution. For example, if the gift was land or a property, and the nonrecipient spouse assisted in the ordinary upkeep of the land like landscaping, these contributions would be considered in determining a fair distribution. The gift of the property itself may still be exclusively held by the recipient spouse at dissolution, but the fact that the other spouse helped with the upkeep may lead to an unequal distribution of the marital assets to be divided.

If you have questions regarding equitable distribution and the classification of gifts as nonmarital and marital property, you should contact a qualified Florida attorney. More information can be found in Section 61.075 of the Florida Statutes, which governs equitable distribution of marital assets. The issues should be considered by you or your heirs when you leave property to beneficiaries by gift or bequest.

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