Some lucky couples receive generous gifts from one of their parents upon matrimony. Often, these gifts go toward the purchase of their marital home. In the unfortunate event that couples find themselves filing for divorce, that generous monetary gift may turn into an arguing point during property division.
If one set of in-laws gifts an amount that was put toward the purchase of a home and the marriage ends in divorce, it may be difficult to argue who the home rightfully belongs to. The spouse whose parents gave the funds may argue that the gift was intended solely for them and not their partner. The other spouse may argue that the gifted funds were given to the two of them. So what happens when a marital home is purchased with funds given by in-laws?
Well, here in Texas, a community property state, everything purchased or acquired during the marriage is considered the property of both spouses. That is, except for gifts and inheritances given to one spouse specifically. Even though the down payment may have been gifted by one spouse’s parents, it was put toward the purchase of the marital home which is subject to division. If the spouse or their parents were to argue that it was intended only for their use, then an attorney may be able to pursue the recovery of the gifted funds. However, generally speaking, any time a gift or inheritance is commingled with marital funds or property, it too becomes part of the marital estates and subject to division.
As wonderful as the wedding gift of a down payment may be, it can cause frustration for couples during divorce. One of the best ways to protect valuable gifts in the event of divorce is to keep them separate from marital assets right from the start. By doing so, spouses can protect gifts and inheritances from being subject to property division.