Are Christmas Gifts Community Property?

Tis the season to be giving.  Tis also the season when divorce rates increase.  A question we were recently asked is how the divorce courts divide expensive gifts given in years past.

Normally, the divorce court will divide all community property equally in a divorce.   Is that car you gave your spouse or that jewelry your spouse gave you exempt from a divorce?  A Christmas gift, or other gift, might not be community property.

Community Property is a label the courts apply to assets (or debts) acquired during a marriage.  When spouse’s divorce they must divide all property acquired during the marriage.  There are exceptions.   Property inherited during the marriage is not community property.   Property gifted to you by your spouse is not community property.   Neither an inheritance nor a gift will be divided in a divorce.

The question then is what is considered a gift.   The legal definition of a gift is “a gratuitous transfer of property to a recipient for less than full market value”.   In other words, you gave someone something of value without charging the full value of the gift.

The law adds that the gift must be voluntary with a showing of clear intent that the transfer was a gift.  The clear intent is the biggest question raised in court.   Did your spouse buy a car and say “honey this is your car.  Or did your spouse put a big red bow on the car and included a card that said, “Merry Christmas, enjoy your new car”.  The later “verbal gift” may not be a gift.  While attaching a red bow and card to the car shows a clear intent for the car to be a gift.  In this scenario the court might consider the car without the bow and card as being community property.   Which would be divided equally in a divorce.   While the gift with the bow and card would be separate property and not divided in a divorce.

For more information on community property or separate property review our article on How Courts Divide Community Property.