Real property (real estate) or personal property (money, jewelry, art, stocks, bonds, etc.) given by one spouse to the other spouse during marriage is generally presumed to be a gift, and is the receiving spouse’s separate property. Such a gift includes all income and property from the gifted property—such as stock splits resulting in new shares of stock, and stock dividends paid. Because such transfers of property are separate property owned by the receiving spouse, the spouse who gave or gifted the property during the marriage generally cannot recover it or seek a credit or offset for it against the marital or community property.

But laws on spousal gifts during marriage vary from state to state, and especially with gifts that are substantial in value in relation to the income and assets of the spouses. And in some states the character of property as (1) separate property or (2) community or marital property can be permanently changed if there was a transmutation of the property by written agreement of the parties—an agreement in which the property was transmuted from community property to separate property, for example. A transmutation of real property may have to be recorded in the county records to be effective.

Laws regarding the characterization of property given by one spouse to the other spouse during marriage, and any transmutation of the property, are generally located in a state’s statutes, and often in the family or domestic relations code.

In Alabama, property acquired during marriage is generally considered marital property, which is subject to division upon divorce. However, gifts from one spouse to another during the marriage are typically considered separate property of the receiving spouse. This includes any income or additional property derived from the gifted property, such as stock dividends or splits. Alabama does not follow community property laws, which are only applicable in some states, but rather follows the equitable distribution principle. This means that during a divorce, marital property is divided equitably, but not necessarily equally, and separate property remains with the individual spouse. It is important to note that the characterization of property as separate can be altered through a process called transmutation, which usually requires a written agreement between the spouses. For real property, such an agreement may need to be recorded with county records to be effective. Spouses considering transmutation should consult with an attorney to ensure proper legal procedures are followed and the agreement is enforceable.