MW My friend's father gifted her Tesla and Google stock. They could be worth millions. Will they be split 50/50 in her divorce?

By Quentin Fottrell

'My friend is working on an exit plan'

"I did recommend not making any sudden moves, because it could look like they are trying to hide assets." (Photo subject is a model.)

Dear Quentin,

Are assets - stocks, in this case - that were a gift to an individual subject to division as community property during a divorce? I have a friend who is working on an exit plan from their marriage. Over the years of their marriage, they have received stocks in companies like Google $(GOOG)$ $(GOOGL)$ and Tesla $(TSLA)$ from their father. They could be worth millions. The equities are in a brokerage account solely in their name.

'The equities are in a brokerage account solely in their name.'

It's not an IRA or other tax-specific account. As my friend laid out the situation today, my inclination was to recommend having their dad stop making gifts until the attorney gives an all-clear, but I didn't know what to suggest regarding the existing equities. I did recommend not making any sudden moves, because it could look like they are trying to hide assets.

I'm sure the lawyer will have specific instructions, but my friend is not comfortable retaining a lawyer just yet.

Friend in California

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

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Gifts are treated as separate property, but the increase in value of those gifts may be more complex.

Dear Friend,

Don't hide assets during a divorce. They could end up being taken from you. It's best to deal with these issues head on.

Those gifts will have increased in value since they were placed in an account in your friend's name. If their father gave them $100,000 worth of Tesla shares at the end of 2015, when they were selling for $16 a share, those same shares would be worth $335 a share as of Aug. 18. Similarly, if your friend received $100,000 in Alphabet shares 10 years ago at $38 per share, they would now worth $204 a share, so once again they would be sitting on some hefty profits.

If your friend received $100K in Alphabet shares 10 years ago at $38 per share, they would now worth $204 a share.

Roslyn Soudry, matrimonial and family law attorney in Offit Kurman's Los Angeles office, believes your friend may be lucky. "Generally, gains and/or losses due to market fluctuations or other passive factors would not alter the separate property characterization of stock gifted to a party during marriage," she told me. "However, the community could have a claim if the increase in value is as a direct result of the efforts of either party during the marriage, or if the separate property is commingled with community property."

You're correct in advising your friend to plan ahead. California is a community-property state, which means that everything earned during a marriage is split 50/50, with inheritances and gifts being among the exceptions. (In an equitable-distribution state, on the other hand, assets are divided fairly, if not always equally.) Stocks received as a gift are separate property in California. A house purchased before a marriage is also considered separate property, but the rise in value of those stocks or of that house could be taken into account by a judge during a divorce.

Related: 'I'm divorcing after a lot of heartache': Should I suggest my husband keep his $200,000 401(k), so I can take our $360,000 house?

Splitting assets can be highly contentious, especially when it comes to gifts, whether they're from a spouse or a parent or other third party. So what could constitute a gift, regarded as separate property, becoming marital property? "If you are gifted a motorcycle by a friend during your marriage, and your spouse does not use it, pay for maintenance, or pay for the insurance on the bike, you will likely be able to keep this asset as your own separate property," according to the Los Angeles-based law firm Kramer & Zitser.

Always beware of commingling, along with the sometimes blurry line between gifts and loans.

But always beware of commingling, along with the sometimes blurry line between gifts and loans. "If a spouse receives a gift from their spouse or another party and they commingle the present with marital property, it would no longer be considered separate property," Kramer & Zitser adds. "For example, if one spouse's father 'gifts' them $10,000 and they place it in an individual account under their name only, they would likely keep the funds during the divorce. However, if they deposit the money in a joint bank account, it becomes marital property."

Related: 'I'm trying not to go bankrupt': My husband of 24 years asked for a divorce. He wants my cell-phone records. Should I report him for tax fraud?

For anyone else reading this who is considering divorce (or marriage), the best way to ensure things remain separate is to have a prenuptial agreement stating unequivocally that in the event of divorce, each partner takes out of the marriage whatever they brought into it. A postnuptial agreement is a similar contract that is signed after a wedding. Under the oversight of an attorney, such agreements can also specify the division of financial responsibility if a couple has children. Do both people contribute equally to their children's support and education?

A word of warning: Alimony may also be a factor based on the relative wealth of either party.

Prenups and postnups must be fair and reasonable, and those whose terms are deemed too onerous can be overturned. A judge would likely frown on a spouse worth $10 million specifying that their partner would only walk away with $10 in the event that they divorce. There are also other reasons a prenup can be invalidated - if one party did not disclose their assets or debts prior to signing, for instance, or if one party did not have the opportunity to have a lawyer review the agreement before signing. Do-it-yourself prenups off the internet may be easily invalidated.

A word of warning: Alimony may also be a factor based on the relative wealth of either party. Rules vary by state. In California, the "rule of 65" states that if someone's age at the time of their divorce plus the number of years they were married is equal to or more than 65, the divorce court could order their spouse to pay alimony indefinitely. When planning to exit a marriage, some attorneys recommend using a prepaid or "burner" phone for initial legal inquiries, particularly if you have a suspicious spouse and/or there's a question over marital versus separate property.

Tell your friend to try not to allow their anxiety over a prospective divorce prevent them from making smart decisions now.

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More columns from Quentin Fottrell:

My therapist said he was in-network. He's not. Am I obliged to pay out-of-network rates for all prior sessions?

'I have never been asked for money before': My friend wants to borrow $1,600 to pay her rent. Do I say yes?

'I feel shaken': A man offered $50 to powerwash my patio. He would not take 'no' for an answer.

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-Quentin Fottrell

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August 22, 2025 14:17 ET (18:17 GMT)

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