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“WHEN IS A GIFT NOT A GIFT? In Contemplation of Marriage and After Marriage”

November 18, 2011

image MR LIGHTMAN/ freedigitalphotos.net

By  Kenneth L. Harvey, David K. Yamamoto and Colin O’Connor

Before Marriage:
In the State of California when someone makes a gift of personal property to another person, such as a ring, the person receiving the gift generally has absolute ownership rights over that property. That is not always the case when a gift is made in contemplation of marriage. For example, let’s say that Frank proposes to Faye and she accepts. He gives her an engagement ring, which now adorns her left ring finger. A few months later, Faye tells Frank she does not want to marry him. Frank asks Faye to return the ring and she refuses. Can Frank recover the ring from Faye? Yes. What if the marriage is cancelled by mutual consent. Can each of them recover a gift made to the other in contemplation of marriage? Yes.

The above answers are based on California Civil Code §1590 Gifts in contemplation of marriage; recovery, which states “Where either party to a contemplated marriage in this State makes a gift of money or property to the other on the basis or assumption that the marriage will take place, in the event that the donee refuses to enter into the marriage as contemplated or that it is given up by mutual consent, the donor may recover such gift or such part of its value as may, under all of the circumstances of the case, be found by a court or jury to be just.” This only applies to a party to a contemplated marriage. For instance, a parent of one of the parties cannot recover a gift made in contemplation of their child’s marriage.

After Marriage:

Faye and Frank go through with the wedding. For their 20th anniversary, Frank buys a $20,000 diamond ring for Faye as an anniversary present. Five years later, the parties separate and Frank claims that the anniversary ring is community property because he did not waive his community property interest to the ring in writing. Faye takes the position that the ring is her separate property, since it was a gift from her husband.

The issue before the Court is whether California law requires Frank to give up his community property rights to the ring in writing. As a general rule, the changing of the character of an asset (transmutation), i.e., from community property to separate property, or vice versa, is not valid unless there is an express declaration in writing signed by the spouse whose interest is adversely affected. (Family Code §852(a)) This general rule does not apply to gifts between spouses for “clothing, wearing apparel, jewelry, or other items of tangible personal property” which is to be used solely or mainly by the recipient of the gift where the value of the gift is not “substantial” taking into account the circumstances of the marriage (Family Code § 852(c)).

In the above hypothetical, even if Frank testifies under oath that the anniversary ring was intended as a gift to Faye, it is not determinative as to whether the ring is a gift or not a gift. The trial court must find that the value of the ring was not “substantial,” given the circumstances of the marriage, before the ring can be confirmed as Faye’s separate property. The determination as to whether the value of the ring is substantial or not substantial will most likely be decided by comparing Frank and Faye’s marital standard of living, as opposed to the value of the ring. For instance, if Frank and Faye had a combined annual income of $70,000 and the value of the ring was $16,000, it appears the value of the ring is substantial, thus requiring a writing to change it from community property to Faye’s separate property. Family Code §852 does not provide any specific criteria by which “substantial” is to be judged. Accordingly, the trial court is vested virtually absolute discretion to make the decision on whether the gift was really a gift.

Kenneth L. Harvey, David K. Yamamoto, and Colin O’Connor are family law attorneys in the South Bay area of Los Angeles, CA. All three of them are members of A Better Divorce, a group of professionals dedicated to the collaborative divorce process which helps individuals transition through the process without litigation.

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