The ever-changing landscape of Equitable Distribution case law makes it difficult, if not impossible, to rely on the “law.” A parent cannot (or rather, should not) make a gift to a married child without bringing the lawyers into it.
Take the April, 2016 decision of the Appellate Division, Second Department in Mistretta v. Mistretta. There, the parties had been married in 1991. During their marriage they lived in a home, at first owned by the husband’s mother, and deeded to the husband in 1996.
At the trial of this 2010 divorce action, the husband claimed that the residence was a gift from his mother, and therefore constituted separate property. However, he acknowledged that for many years, he paid his mother $500 per month “rent” (the opinion does not state whether rent was paid after the property was deeded to the husband). The husband and his sister both acknowledged that rental income from the subject premises was paid to the husband’s mother pursuant to the written agreement between the husband and his mother that was introduced into evidence.
Supreme Court, Suffolk County Justice Joseph Santorelli held that the home was marital property subject to equitable distribution. He directed the sale of the premises, with the parties to share equally in any net proceeds or deficiency from such sale.
The Second Department affirmed. The appellate court held that the husband failed to rebut the presumption that the home was marital property, as the husband acquired it during the marriage and prior to the commencement of this divorce action “for consideration” that was paid during the marriage. The husband did not prove that the home was his “separate property,” as “property acquired by bequest, devise, or descent, or gift from a party other than the spouse.”
Moreover, the Second Department held that it was proper for Justice Santorelli to direct the sale of the home and the equal division of any net proceeds or deficiency.
The opinion does not tell us whether any “consideration” was paid to the mother other than the $500 per month “rent.” We are not told for how long rent was paid. We are not told what the fair rental value was before the property was acquired by the husband. We are not told what the value was when the husband acquired the home 14 years before the divorce action was commenced; or what it was at the time of commencement or trial. The husband received no credit whatsoever for any gift. The home was treated no differently than had the husband, using marital funds, purchased the home from a stranger for full fair market value.
We are not told that this result is what the husband and his mother intended. He said it was a gift.
So, assuming that the husband’s mother intended to make a gift of something to her son, how do the husband and mother “protect” the gift?
With the absence of facts in the opinion, nothing short of a post-nuptial agreement between the husband and wife appears sufficient. There, the gift may be acknowledged, and the issues of credits on divorce and appreciation after acquisition can be addressed. It would appear that a mere written recitation or agreement by the mother and the husband would be insufficient.
The alternative is for the husband not to be deeded full title. For example, it could be put in trust. He could be given a “life estate,” remainder to the children.
The point is that a parent just cannot make a gift to a married child and expect it to be fully recognized. Mistretta tells us the lawyers must be brought into it.
Tor Jacob Worsoe, Jr., of Holtsville, represented the husband.