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Beware: The Gifts You Receive from Your New Beau May Not Be Yours to Keep

By Deborah Soleymani, Esq. and Casey J. Marticorena, Esq., CFLS.

A Los Angeles Superior Court Judge recently ruled in favor of Shelly Sterling, ordering V. Stiviano to return $800,000 in cash and cars, and a $1.8 million duplex gifted to her by Donald Sterling.

The ruling is legitimate and comes from the legal principal of community property. The California community property law states that all property earned after the date of marriage and before the date of separation belongs to the community; therefore each party is entitled to one- half. In this case, Sterling’s Wife argued that one-half of the condo, cars, and cash belonged to her because they were earned during the marriage. Because it wasn’t all his to begin with, Sterling couldn’t give it away.

Stiviano argued, unsuccessfully, that the gifts were made while the parties were separated, and therefore, Sterling’s separate property to give away. The principle of separate property is that anything earned after the date of separation is that party’s separate property and can theoretically be spent and gifted in any way that that person desires. Well, the Court didn’t buy Stiviano’s argument. The Court found that, although Sterling and his Wife were estranged, they were not “separated” during the years that Stiviano received the gifts.

The moral of the story to the recipient of lavish gifts from a married person: beware! You may be personally liable for the tangible items you’re receiving from your new relationship.

The gift-giving spouse isn’t off the hook, though. In a divorce, a Court may order a party to reimburse the community for funds “deliberately misappropriated” and can issue sanctions for breach of the fiduciary duty. The sanctions and reimbursements may be taken out of that person’s share of the community property.

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