If you received an inheritance or significant asset as a gift while you were married — and you are now parting ways with your spouse — you may be wondering, “are gifts included in divorce settlements?” Notably, the answer depends upon the circumstances surrounding the gift. While the rules concerning gifts are different in each situation, it’s essential to understand the nuances of how Georgia treats gifts from third parties and gifts made between spouses.

Gifts from Third Parties

Under Georgia law, gifts received from third parties during the marriage that are specifically intended for one spouse are considered separate property. Property that is characterized as “separate” remains with the spouse who originally owned it in the event of divorce. But if the gift was intended for the couple, it would be considered marital property, and divided during the divorce process.

Similarly, inheritances are considered separate property — and do not become part of the marital estate. In these situations, the funds belong to the spouse who inherited the assets. The only way an inheritance can be subject to division in divorce is if it was commingled with marital assets.

Gifts Commingled with Marital Assets

Complexities can arise when dividing property in divorce if funds gifted to one spouse (or inherited assets) are mixed with marital property. For instance, if an inheritance was transferred into a joint marital account, or a spouse was put on the title of the asset, it may have become marital property through transmutation. In order to remain separate property, inherited assets must not be commingled with marital assets.

Interspousal Gifts

The general rule that gifts are characterized as separate property does not always apply to interspousal gifts in divorce. If marital funds were used to purchase a gift for the benefit of the marriage, that particular gift would be considered a marital asset and divided in divorce. However, if the recipient spouse can show “donative intent,” they may be able to establish that the property in question constitutes a valid gift that should be considered separate property.

To qualify as a valid gift, the spouse claiming the property as a gift must demonstrate three elements:

1) The donor spouse intended to make a gift

2) The recipient spouse accepted the gift

3) There was delivery of the gift

The above elements are questions of fact that would be carefully evaluated by a court. Generally, personal gifts given on holidays or birthdays are presumed to be valid gifts and constitute separate property. These gifts are not typically included in divorce settlements in Georgia, unless a spouse agrees to give it back or trade it for another asset.

How Can You Protect Gifts from Being Included in Divorce Settlements in Georgia?

The best way to ensure a gift is not included in your divorce settlement or judgment is to enter into a valid prenuptial agreement with your spouse prior to marriage. A prenup can outline the spouses’ financial expectations for the marriage and define what the couple considers separate property and marital property. It can designate property that would otherwise be considered marital property by law as separate property so it is protected from division in divorce.

If you did not execute a prenup before you were married, you can enter into a postnuptial agreement at any time during your marriage. This can be a useful tool if you unexpectedly receive a significant inheritance or gift while you are married, and you know divorce is imminent. A postnup is essentially the same as a prenup — the only difference is when it was executed.

Other ways you can protect your inheritance or gift from divorce is by keeping it separate from marital assets. Open a separate account solely in your name to deposit the inherited or gift funds. Avoid using those funds for making improvements to marital property, such as renovating the marital home, or starting a business with your spouse. Be sure to maintain separate titles if the inherited property is real estate.

Contact an Experienced Georgia Divorce Attorney

If you would like to learn more about whether gifts are included in divorce settlements, it’s best to consult with a knowledgeable divorce attorney. At NVP Family Law, we provide experienced representation and compassionate counsel to clients for a wide range of divorce and family law matters, including those involving complex property division issues. We welcome you to contact us for a consultation online or by calling 470-314-0253 to learn how we can assist you in your case.