Gifting and Divorce

Many parents and grandparents (the giver) are able to gift to their children and grandchildren during their lifetime and again at their death (inheritance). However, many times the “giver” is concerned that the gift will be lost or divided in the event of the child or grandchild’s divorce.

Although, Michigan courts have the discretion to treat gifted and inherited assets as separate assets and not assets of the marital estate, there are some steps to follow to assist in the protection of these gifted or inherited assets:

1. The recipient needs to keep the gifted/inherited assets segregated in an individual account, not a joint account with the spouse.

2. The recipient should consider having a post-nuptial, or if not married, a pre-nuptial agreement prepared.

Of course there are many other estate planning issues that may need to be addressed, but the most important thing to remember is that the recipient should seek legal advise immediately upon receipt of a gift or inheritance if none of these issues have ever been discussed.