What Happens to Gifts Between Spouses During a Divorce?
Gifts expressing the love and affection for one another are common in a blissful marriage. However, when a marriage breaks down and leads to divorce, what happens to these gifts? Does the donor-spouse retain possession of the gift or will it be subjected to the applicable laws on the division of matrimonial assets?
This article seeks to provide some clarity on these inter-spousal gifts by discussing 2 types of gifts that spouses may give each other during their marriage, and whether they may be considered matrimonial assets.
1. Inter-Spousal Re-Gifts
An item that originated from an inheritance or a third-party gift acquired by one spouse (known as “donor spouse”) and subsequently given by the donor spouse to the other spouse during the marriage.
For example, a husband inherits a sum of money from a relative, and he uses part of that money to purchase a diamond necklace for his wife during the marriage.
Inter-spousal re-gifts are not considered matrimonial assets
Inter-spousal re-gifts are excluded from the Women’s Charter’s definition of “matrimonial assets” and are therefore not available for division between the parties when a marriage breaks down.
This is because the source of such gifts is directly traceable to the inheritance or third-party gift acquired by the donor spouse, and the donor spouse would not have put in any effort in the acquisition of the gift to the other spouse.
Section 112(10) of the Women’s Charter’s definition of “matrimonial asset” excludes”
“any asset (not being a matrimonial home) that has been acquired by one party at any time by gift or inheritance and that has not been substantially improved during the marriage by the other party or by both parties to the marriage”.
An inter-spousal “re-gift” falls within this exclusion. This means that in the example above, the wife would be able to keep the diamond necklace that was given to her by the husband, because it had originated from an inheritance and is thus excluded from the pool of matrimonial assets.
2. Pure Inter-Spousal Gifts
An item that was acquired by the donor spouse not by way of an inheritance or third-party gift, and subsequently given by the donor spouse to the other spouse during the marriage.
For example, a husband works hard to earn money and uses his salary to purchase a pair of diamond earrings for his wife during the marriage.
Pure inter-spousal gifts are considered matrimonial assets
In contrast, pure inter-spousal gifts are matrimonial assets available for division between the parties when a marriage breaks down. Such a gift falls directly within the Women’s Charter’s definition of “matrimonial asset”, being an asset that was:
“acquired during the marriage by one party or both parties to the marriage”.
The donor spouse would no doubt have had to spend a sum of money in acquiring the item, and its original status as a matrimonial asset would not be altered just because it was subsequently transferred from the donor spouse to the other spouse. Such gifts are not intended to fall within the phrase “by gift or inheritance” in section 112(10) of the Women’s Charter, and are accordingly meant to form part of the pool of matrimonial assets. This is so that the effort expended by the donor spouse in acquiring the gift would be recognised.
Therefore, going back to the example above, the wife would not be able to keep the diamond earrings – the court would have the power to order a division of the value of the earrings between the parties during divorce.
De minimis exception: When can pure inter-spousal gifts be considered matrimonial assets?
The only situation in which a pure inter-spousal gift would not be treated as a matrimonial asset is when it is considered de minimis, in which case the court would have the discretion to exclude it from the pool of matrimonial assets.
Items considered de minimis are usually of a personal nature and of a small value as compared to the sum of the pool of matrimonial assets. For instance, dresses and jewellery that are of no substantial value fall under the de minimis exception.
There is no hard and fast figure that the courts use to decide if a gift is considered de minimis. Even if an item is of a seemingly high monetary value, it may still be considered de minimis when viewed in the context of the overall pool of matrimonial assets.
For example, in the case of Tay Ang Choo Nancy v Yeo Chong Lin, the Singapore High Court excluded the husband’s gift of jewellery to the wife from the pool of matrimonial assets. The court held that even if the jewellery was “worth something in the range of a quarter million to half a million dollars”, it would not add substantially to the matrimonial assets taken as a whole, because the total pool of the matrimonial assets amounted to S$116,560,000.
The division of matrimonial assets can be contentious and bitter. Under such circumstances, it is always advisable to engage a divorce lawyer who can advise you on what kind of assets fall within the pool of matrimonial assets so that you do not have expend unnecessarily time and energy fighting over lost causes.
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