In this all too familiar scenario, Husband and Wife are divorcing after years of marriage. They each agree to take their own personal property. But when Wife attempts takes all of ‘her’ jewelry the Husband objects.
The Wife is puzzled. She thought that the jewelry was a gift to her from Husband and that she should be entitled to keep the jewelry, without further equalization. Husband, on the other hand, wants either half of the jewelry or an offset for half of the value based upon his claim that the jewelry was purchased during the marriage as investments, thus entitling him to a half interest.
Who is correct? Well, the answer is “it depends”.
Arizona statutes provide that all property acquired by either husband or wife during the marriage, except that which is acquired by gift, devise, or descent is the community property of the husband and wife. The key here is whether it was truly a gift to transmute it to Wife’s separate property.
The determination of whether the jewelry was a gift to Wife and becomes her separate property, free and clear of any claims by Husband, or whether it was an investment for which each party has a one half interest, is a question of fact.
Based on current case law, it is the burden of the person claiming that property purchased during the marriage with community funds is that person’s separate property. Moreover, possession alone is not dispositive. The court will look examine factors such as the intent of the donor and the delivery and whether an irrevocable gift has been made.
This means that which spouse wore the jewelry should not be the end of the inquiry. They will need to show that the other spouse intended to make an irrevocable gift, such as connecting the purchase and receipt to a special occasion such as a birthday, birth of a child or anniversary.