Will gifts from wife’s father be considered marital property subject to equitable distribution in a Virginia divorce?
It depends upon the circumstances and the donative intent of the gift giver. It is not unusual for parents to give gifts to their married children. In Virginia equitable distribution proceedings, the question then becomes whether the gifts were intended to be separate property of the married child, or joint marital property of the couple. In Cummings v. Cummings, CL09-1260, the Henrico County Circuit Court held that sale profits for a gift of a real property were subject to equitable distribution as marital property, but the gift of a Toyota Sequoia automobile to wife while the parties were separating should be classified as her separate property.
Prior to the parties’ marriage, wife owned a home on Hanover Avenue in Richmond, Virginia, as well as an automobile without any outstanding liens. The parties lived in the Hanover residence after their marriage, but they subsequently sold the property, using the proceeds from the sale and gifts from wife’s parents to purchase a home in Goochland County and later a home in Henrico County, Virginia. Throughout the marriage, the wife’s father contributed significant funds to the parties, including child support due by his son-in-law for two children from a prior marriage, income from investments of his investment company, and annual gifts, all claimed as gifts by father for estate planning purposes.
In June 2001, the husband and wife bought a condominium at the Wintergreen Resort in Virginia for $300,000, a property they owned as tenants by the entirety. For the initial down payment, the parties jointly paid $50,000, and they borrowed the remaining $250,000 from the wife’s father. In January 2002, the wife’s father drafted a check to her for $132,226.76, which was used to pay off the Hanover Avenue home (which the parties agreed was separate property), as well as a check for $237,713.26 with the memo stating “Unified Credit Payoff Wintergreen mortgage.” After her father wrote the checks, wife repaid the balance of the mortgage on the Hanover property and later paid the remaining balance on the Wintergreen property. Six years after the purchase of the Wintergreen property, the parties sold it for $522,507.00, the sum of which was divided into three accounts.
The issue in this Henrico County, Virginia, divorce proceeding involved the distribution of the three accounts and the classification of the property as marital or separate for equitable distribution purposes. In evaluating the factors established by Virginia Code §20-107.3, the Henrico County Circuit Court judge examined the monetary and non-monetary contributions of both parties, the debts and liabilities of the spouses, and whether wife’s father’s payments and financial assistance qualified as gifts to both parties, or to wife alone. Under Virginia law, a gift requires three key elements: intent, delivery and acceptance, which must be established by clear and convincing evidence. To determine this fact, the Henrico County divorce court judge considered the unpublished case of Beck v. Beck, (2000 Va.App.), where, in a similar factual situation, the Virginia Court of Appeals stated, “The mere fact that the property acquired was jointly titled and was intended to be used as their residence, was insufficient to establish a gift by clear and convincing evidence.” Here, however, the Henrico County Circuit Court found that making the Wintergreen property a gift for tax purposes required it to be made to both parties in order to receive the maximum tax benefit. Husband’s divorce attorney had wisely introduced into evidence wife’s father’s gift tax returns which showed the maximum amount claimed for a gift to both husband and wife. Based on the statutory factors of Virginia Code Section 20-107.3(E), the divorce court judge determined that the wife should receive 60% of the marital assets while the husband should receive 40%. Each party received 50% of the marital share of the retirement funds. In regards to the automobile, however, the father had given the SUV to the wife knowing that the parties were considering separation. As a result, only wife received that property as a gift, and, as wife’s separate property, it was not subject to equitable distribution. Therefore, the circumstances surrounding the gifts were determinative in their classification as marital or separate property.
You should consult with your Virginia divorce lawyer concerning how gifts received during your marriage would likely be classified in equitable distribution proceedings in a Virginia divorce.