For individuals with substantial family wealth, gifts or inheritances, protection of wealth in divorce is a significant concern.
In New Hampshire, the division of marital property is governed by RSA 458:16-a. Marital property is defined broadly. Courts are directed to divide marital property “equitably” in a divorce. The statute presumes that equal is equitable, but outlines factors that may be considered by a court in fashioning an unequal property division (see Section 458:16-a). Some of these factors include:
- duration of the marriage,
- existence of a prenuptial or postnuptial agreement,
- value of any property acquired by gift, devise, or descent,
- value of any property acquired before the marriage,
- age, health, standard of living, and economic circumstances,
- contributions to the marriage,
- opportunities to acquire future income and assets,
- age and existence of minor children, and
- amount and sources of income and liabilities.
Unlike some states that automatically exclude inherited or gifted property, New Hampshire courts begin with the presumption that all property owned by either party, whether held individually or jointly, is marital property and subject to equitable division. Such assets might include family real estate, inherited investment portfolios, business interests, retirement accounts, trust interests, collectible or recreational vehicles, jewelry, antiques, and many other assets. Once the property is identified as gifted or inherited, the analysis then turns to equitable and statutory analysis. In some cases, after analysis of applicable factors, gifts and inheritances are treated differently from other marital property. In other words, gifts and inheritances may not be divided. It should be noted, however, that gifts and inheritances are not automatically excluded from consideration.
Whether an inherited or gifted asset will be awarded to the intended recipient, potentially resulting in an unequal division of marital property, depends on many factors, including:
- when the gift or inheritance was received,
- how the asset was maintained during the marriage,
- whether the asset was accessed during the marriage or used in support of the now-dissolving family unit,
- whether the asset was commingled with other property or maintained separately,
- duration of the marriage, and
- equitable consequences of resulting in the gifted or inherited property to one party.
Commingling a gifted or inherited asset poses the greatest threat to its retention. Examples of commingling include: depositing gifted funds into a joint account, using gifted funds to pay for marital expenses, using gifted funds to improve a marital asset or as a deposit to acquire a marital asset, or changing title to a gifted asset so that it is jointly held. Commingling increases the likelihood that the gift or inheritance will be divided, at least in part, like other marital property. Once a gift or inheritance is blended with other marital property, separation becomes difficult. A court may determine that it would be equitable to divide some or all of the assets. In contrast, assets that are maintained separately, not used during the marriage, held solely in the recipient’s name, and not utilized or accessed by the other spouse are far more likely to retain their separate character.
New Hampshire courts have broad equitable discretion. Ultimately, treatment of gifted and inherited assets depends on facts, documentation, marital finances, and the overall equities of each case.