In an Arizona divorce, sometimes a gift is no longer a gift. According to the Arizona Court of AppealsThis is the Court that hears appeals and special actions from the decisions made by the superior court. A panel of three judges reviews each appeal and issues a ruling. The Arizona Supreme Court is the only state court higher than the Court of Appeals.Read more about Court of Appeals decisions in Cameron v Cameron and Hrudka v Hrudka, a gift to your spouse, isn’t always a gift. Community PropertyThis is property that belongs equally to both spouses. It includes any property, asset, or liability either party acquires during the marriage with the exception of property acquired by gift or inheritance. Parties can opt out of community property laws with a prenuptial…Read more about Community Property, Sole and Separate PropertyProperty that belongs 100% to one spouse and is not part of the community property. Most commonly, this is property the spouse brought into the marriage.Read more about Sole and Separate Property, and Property division in divorce can be complicated.
Cameron V Cameron
In the case of Cameron v. Cameron, 148 Ariz. 558 (App. 1985), the Husband gifted his Wife a car for her birthday. At the time of divorce, she argued because he gave the car to her, it should be hers in the divorce.
The Wife’s argument is understandable, a gift is a gift, and it seems pretty straight-forward. After all, one of the fundamental laws regarding community property is that property acquired as a gift is not Community PropertyThis is property that belongs equally to both spouses. It includes any property, asset, or liability either party acquires during the marriage with the exception of property acquired by gift or inheritance. Parties can opt out of community property laws with a prenuptial…Read more about Community Property. A.R.S. § 25-211(A)(1).
But the Arizona Court of Appeals disagreed. Yes, a spouse can surrender their community interest in property by gifting something to their spouse. But, in order give up their community interest, there must be “a clear showing that the giver intended to relinquish his community interest in the gift.” IdA citation shorthand that refers to the immediately preceding legal authority. It is used when you cite again from the source you last cited to.Read more about Id. at 559.
The fact that the car was given as a birthday gift does not, by itself, qualify as a clear showing husband intended to give up his ownership interest in the vehicle. Additionally, the fact he intended wife to drive the car did not mean he gave up his interest in the vehicle. “Such ‘gifts’ between spouses of assets intended for community use are no more than a designation of whom the primary user will be and not a deliberate attempt to convert community property into separate property.” Id.
Apparently, from the perspective of the Court of AppealsThis is the Court that hears appeals and special actions from the decisions made by the superior court. A panel of three judges reviews each appeal and issues a ruling. The Arizona Supreme Court is the only state court higher than the Court of Appeals.Read more about Court of Appeals, when one spouse gives another spouse a car, the “gift” they’re giving is the right to be the spouse designated to drive that car—the car is not the gift.
Hrudka v Hrudka
A similar result was reached in a divorce involving a million dollars’ worth of jewelry. In Hrudka v. Hrudka, 186 Ariz. 84, 92 (App. 1995). Wife had 45 pieces of jewelry; Husband acknowledged giving her many of the items, but he argued the jewelry was purchased as an investment. Wife argued they were gifts, and she wore them; therefore, they belonged to her as her sole and separate property.
The TrialA court hearing in which evidence and testimony are taken, and the Court makes a final determination of the issues raised in a petition. Trials and evidentiary hearings are somewhat synonymous, but the difference is one of scope: Evidentiary hearings are more limited in scope…Read more about Trial court awarded 20 pieces of jewelry to Wife, nine to Husband, and determined the remaining pieces were community property. Wife appealed, but the Court of Appeals affirmed the trial court’s ruling.
The Court of Appeals wrote, “Wife bases her claim of gift upon an assertion of possession, i.e., that, at some point, Husband physically handed over items of jewelry to her and she wore them. However, this TestimonyThe sworn statements of a witness made at a trial or deposition.Read more about Testimony alone does not establish a gift. Rather, Wife must demonstrate (1) donative intent, (2) delivery and (3) a vesting of irrevocable title on delivery.” IdA citation shorthand that refers to the immediately preceding legal authority. It is used when you cite again from the source you last cited to.Read more about Id. at 93.
Furthermore, the Court said, the fact Wife wore the jewelry does establish whether that jewelry is a gift or an investment. Id.
The jewelry wasn’t the only gift Wife was claiming should be her Sole and Separate PropertyProperty that belongs 100% to one spouse and is not part of the community property. Most commonly, this is property the spouse brought into the marriage.Read more about Sole and Separate Property. For Valentine’s Day 1987, Husband presented her with a Rolls Royce with a red bow on it. In the divorce proceedings, he claimed that the Rolls Royce also was an investment. Further, the car salesman testified that it was his decision, not Husband’s, to put the red bow on it. Husband also produced testimony that the parties rarely drove the car to preserve its value. Id. The TrialA court hearing in which evidence and testimony are taken, and the Court makes a final determination of the issues raised in a petition. Trials and evidentiary hearings are somewhat synonymous, but the difference is one of scope: Evidentiary hearings are more limited in scope…Read more about Trial court determined that the vehicle was community property, and the Court of Appeals affirmed that ruling. Id.
Determining What is a Gift Comes Down to Intent
These cases demonstrate the difficulties a spouse may face in trying to claim the gifts they were given during marriage are, in fact, their sole and separate property. The clear line is drawn with the donor’s intent. Always consider if the person giving the gift intend for the property to be defined as sole and separate property or be held by the community.
