Gifts

>Often times, when I meet with a new client, they will tell me that a parent, a sibling, great aunt, or good friend loaned the client and the spouse money that must be considered a debt to be repaid in equitable distribution. Many times, this was for a down payment for a house, or to get the couple through difficult financial period. The other party, just as often, takes the position that the “ loan” was really a gift. And so the games begin.

Generally, in the law, a gift has several elements. First the he donor must perform some act constituting the actual or symbolic delivery of the gift. Second, the donor must possess the intent to give. Third, the donee must accept the gift. There us also an additional element, which is the relinquishment by the donor "of ownership of the gift. A loan, on the other hand, is generally defined as The giving or granting of something, particularly a sum of money, to another, with the expectation that it will be repaid (typically with interest) or returned.

When comparing these in the context of a divorce, several questions come to mind. First, if the money was given when the parties purchased a home, was there a “gift letter.” This is very often required by the banks in order to make sure that the money is not a loan. If there is such a gift letter, this is often the end of the inquiry. On the other hand, if there are periodic payments to the person who gave the parties the money, then it may in fact be considered a loan for purposes of distribution. …

Continue Reading A Loan by Any Other Name Is a… Gift… To Be Shared

In Ferraro v. Ferraro, a new unpublished (not precedential) decision from the Appellate Division, the Court reaffirmed the notion that gifts made to children under the Uniform Transfers to Minors Act (UTMA) are "in addition to, not in substitution for, and does not affect any obligation of a person to support the minor." 

Before getting into the relevant facts in Ferraro, a brief review of UTMA’s underlying legal principles is instructive.  Generally, UTMA allows for the transfer "by irrevocable gift" to a custodian for a minor’s benefit.  The Appellate Division noted the statutory provision applicable to securities, which requires that such gifted securities be registered by the giftor in his or her own name, with the subsequent notation, "as custodian for . . . under the New Jersey Uniform Transfers to Minors Act."  The law establishes that the custodian’s responsibilities over such gifts include collecting, holding, managing, investing and reinvesting the custodial property for the minor’s benefit.  As highlighted at the outset of this entry, since the gift is vested in the children, it cannot be used by a parent custodian – who has a fiduciary duty over the gift – to fulfill his or her child support obligation.  It is for that reason why the gift must, unless stated otherwise, be transferred to the minor upon the minor turning 21 years old or the minor’s death.…

Continue Reading Gifts Under The Uniform Transfers to Minors Act – An Addition to Child Support