Is that Money from Your Ex’s Family a Gift or a Loan?
Helping out family financially is a common way of supporting loved ones. When a couple first marries, this support may be especially necessary to set up a new household or get settled into married life. These exchanges are usually given and received with appreciation and gratitude, and the specifics of how the giver views the exchange may never be explicitly stated. This is not necessarily an issue unless the couple later divorces, and the person who gave the money wants to recoup this money as a loan. This expectation can add a lot of conflict into what may be an already difficult divorce, and the question of whether the transaction should be treated as a gift or loan is not always easy to answer. Courts tend to favor seeing exchanges as gifts when possible, and only when the evidence is clear otherwise will they treat it as a loan. A missing mother of five is in the middle of a divorce that includes allegations by the woman’s family that her husband owes them $1.7 million for loans related to his property development firm. This claim adds complex dimensions to the case, and highlights why strong representation in some divorce cases is necessary.
What Is a Gift?
A gift for legal purposes has a very specific definition, and if a court finds a gift resulted from the transaction, seeking reimbursement for the money or property given is not possible. To have a legal gift, the following must be present:
- The giver must take action to symbolically or actually deliver the gift;
- There must be an intent to give;
- The recipient must accept the gift; and
- The owner of the gift must relinquish possession.
Loans are money or property given with the expectation it will be repaid or returned. Problems arise when there is no clear documentation about the nature of the transfer, and parties are left with testimony about conversations surrounding the exchange or patterns of behavior to prove whether a gift or loan was intended. As noted above, without direct evidence in support of a loan, courts tend to find an exchange was a gift, and thus, not recoverable.
Gifts in Divorce
When it comes to determining the nature of a transaction in a divorce, the timing and context of the exchange can be very enlightening. If money was given at the time of the marriage and was used to purchase the home, a gift letter may have been provided, a standard requirement by banks to ensure the money is not a loan. By contrast, periodic payments would be more indicative of a loan, particularly if paid to a third party to settle a debt or support a business endeavor. Further, emails and notations on cancelled checks can also be important clues to the nature of the exchange. Even if a gift is found, though, the division of property can favor the spouse whose family gave the money or property to the couple so that, at least, it stays in the family. Division of property is based upon equity or fairness, and a windfall to one spouse because of the actions of the other spouse’s family could justify giving the other spouse a greater share.
Speak to a Florida Divorce Attorney
Divorce is a complicated process that can produce a lot of complex questions, depending upon the situation. Do not leave yourself in the dark, talk to the experienced Tampa divorce attorneys at All Family Law Group, P.A. about how the law applies in your situation. No one knows the stress and frustration of divorce better than a divorce attorney, and they can guide you to a fair result. Contact the Tampa divorce attorneys and family lawyers at All Family Law Group, P.A. in Tampa Bay for a consultation at no charge. We can be reached at 813-672-1900.