Happy Valentine’s Day – Here is a Gift for You….or Not

It is almost Valentine’s Day – traditionally a day on which lovers express their love for each other by presenting flowers, offering confectionery, and sending greeting cards.  For many, Valentine’s Day is a day of presenting jewelry and for others maybe even something grander, such as an automobile, to a spouse.  Although the recipient of any of these items would likely assume the item was a gift, you would be amazed that when a divorce strikes, the person who “gave” the item no longer feels the item was a gift (making it separate property of the recipient) and instead views it as property of the marriage (making it community property).

Presenting flowers and candy during a marriage is never an issue upon divorce because the items were of nominal value and they no longer are in existence.  Therefore, the issue in divorce concerning who owns gifts made during the marriage usually surrounds jewelry and automobiles which often are presented, not only on Valentine’s Day, but also on special occasions such as birthdays, anniversaries, Christmas, Hanukkah and the like.

It is Presumed to be Community Property Unless It’s Not

There is a presumption for spouses domiciled in California that property acquired during a marriage belongs equally to each spouse. Upon the dissolution of a marriage all of this community property will be divided equally between the spouses. The exception to this rule is if a spouse can establish a separate property right.

Separate property can be established several ways including, but not limited to:  1) an enforceable agreement stating that the property is separate, 2) evidence that the property was acquired before the date of marriage or after separation, or 3) evidence that the property was received during the marriage as a gift or inheritance. It must also be established that such property was never commingled with community property and its character as separate property never changed.

These rules focus on the acquisition of property from someone other than your spouse. So, what rule applies when spouses give or present property to each other?

A Written Declaration May Be Required

The answer is definitely unromantic, but true after January 1, 1985 under the wording of California’s Family Code Section 852. This states that in order to change the character of property (from community property to the separate property of a spouse; or from one spouse’s separate property to community property; or, from one spouse’s separate property to the other spouse’s separate property), the change in the character (called a transmutation) must be evidenced “in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest is adversely affected.”  This applies to real and personal property.

What qualifies as an express declaration is a written document (called a “writing”) containing language which expressly states that the characterization or ownership of the property is being changed.

An Exception:  Jewelry and Other Items of a Personal Nature

Family Code Section 852 has a specific exception which states that the requirement of a writing does not apply to a “gift between the spouses of clothing, wearing apparel, jewelry, or other tangible articles of a personal nature that is used solely or principally by the spouse to whom the gift is made and that is not substantial in value taking into account the circumstances of the marriage.”  Therefore, the Valentine’s Day gift of jewelry is separate property unless it is of substantial value in light of the circumstances of the marriage.  The statute clearly states this.  An example of jewelry that is not considered separate property under this law would be a ring that is purchased with community funds, is valued at over $13,000 and is considered “substantial in value” in a marriage where other gifts had not exceeded several hundred dollars. Unless there is a writing, the ring in this example would be community property.

A Porsche is Not of a Personal Nature

In 2009, the divorce case In re Marriage of Buie &Neighbors made it clear that a Porsche (or any other automobile), “given” by one spouse to the other, is not a gift unless there is a writing sufficient to satisfy the transmutation rules of Family Code Section 852.  The court found that the Porsche was not an article of a personal nature as contemplated by the law.  So, remember, the writing must expressly state that there is a change in ownership or character of the property.   Therefore, merely taking title to the vehicle in the name of one spouse may not be sufficient.  There must be more…. a card?  A legal document?   Whatever written form you choose, I suggest the following “words of love” be included if you intend to give an automobile as a gift, or if you want to establish that you received an automobile as a gift: “I give to … [my spouse] any interest I have in … [specified property].” No one ever said that the law is romantic.

Lesson to Be Learned

The lesson is, a gift is not always a gift.  Even though one might have the intent to give a gift, it sometimes happens that upon the divorce the “gift” is not a “gift” thanks to the laws which most people are unaware of during the marriage.  Sometimes, truth is stranger than fiction.

Happy Valentine’s Day!