When Your Family Gives You Money—How It Affects Your Divorce

Maybe you’ve received a financial gift from your family that you would like to keep as your own. Or maybe your family or other loved ones have offered to help you out while finances are tight. This kind of help can affect your divorce settlement, depending on the specifics. You need the experienced divorce attorney team at Karen Ann Ulmer, P.C. to help you navigate the financial implications of family financial support so that you receive the best possible financial settlement for your Pennsylvania or New Jersey divorce.

Factors involved in financial help from family

There are several major factors regarding financial support from family or friends that determine their effect on your divorce settlement.

• Is it a gift or a loan?
• Is it routine or sporadic?
• To whom is it directed?
• Was it given before the divorce proceedings began or since they started?

Let’s consider a few examples in order to illustrate the potential complexity of financial help from family or friends.

If your parents begin to help you during your divorce because of new financial burdens due to the split, the court is likely to consider it a temporary form of financial gift during a period of insecurity. However, documentation is important. Our attorneys can help you draw up a financial disclosure that ensures that this help does not impact your final settlement.  

If it is temporary support, we do not want it considered part of your income.  

If, however, your parents have been consistently covering one of your family’s bills during your marriage, this may be considered part of your income, which could affect your final settlement. If they have paid this family bill but have expected repayment, the loan could be considered a marital expense, but if nothing was ever formally put into writing, the court may not look favorably on a loan agreement that is written after you have begun your divorce.

If your child’s grandparents have already agreed to help your child with college tuition, this expense may not be factored into marital expenses or child custody. The bill basically does not belong to you. However, if you expect this help to end before your child’s college ends, if it was a one-time gift, or if you have younger children for whom you do not expect this help, then you should clearly document this.

If your parents give you a gift as an individual for your own personal use and you put it into your own personal bank account, this is not considered marital property. If, however, you put it in the family bank account, it is now commingled with the marital funds and has become a marital asset. If you keep your gift separate but use part of it for the family—for instance, paying for a family vacation—then it is possible your spouse’s attorney can argue that the gift is no longer individual but has become a marital asset. We know how to argue against this attempt to transfer property from individual to marital status.

Similarly, a trust given to you as a gift and titled solely in your name is your personal property, not marital property. Income and principal paid to you from the trust are also your individual assets and are not subject to equitable distribution, provided that they remain in your own separate account. But again, if the income is commingled with the family accounts or used for family purposes, or if the trust has any funds in it that were originally marital property, all or part of the trust or the income from the trust could be subject to equitable distribution between spouses.

What you can do to protect your settlement

Our team of experts at Karen Ann Ulmer, P.C. understands the financial complexities of gifts, trusts, and family loans and how to prevent a negative impact on your financial settlement. Your loved one’s kindness should not put you in a more tenuous financial position. We will walk you through collecting the documentation and preparing the arguments you need to present your financial situation accurately, without adverse effects from your family’s generosity. Request a confidential consultation today by calling (866) 349-4721.