A transfer to an in-law may not be presumed to be a gift.

Cohen v. Raymond, 128 A.3d 1072 (N.H. 2016)

Cohen got along famously with his son-in-law Raymond, who went to work in his father-in-law’s scrap metal company. Raymond became one of Cohen’s most valuable assistants. In 2006, Cohen sold the company. He and Raymond each received three-year employment contracts. However, they were not very happy working for the successor, and began to explore other business opportunities. The pair traveled to Germany together to observe scrap metal operations in that country.

Cohen wanted Raymond to become familiar with the world of investing. To that end, he created a brokerage account in Raymond’s name at Merrill Lynch, depositing $250,000 in the account. Apparently there were no formalities observed in this transaction, such as a loan agreement. Cohen later testified that he thought the account would be “seed money” for a future venture.

Unfortunately, Raymond and Cohen’s step-daughter divorced two years later. Next, Raymond withdrew $50,000 from the Merrill Lynch account. Cohen demanded that Raymond repay the entire $250,000, and filed a lawsuit to get it. The trial court ruled that there is a “weak” presumption that a transfer of assets to an in-law is a gift, which shifted the burden of proof to Cohen to show that there was no gift.

On appeal, the New Hampshire Supreme Court held that the presumption of a gift applies only to transfers to a spouse or children, not to transfers to in-laws. Upon remand, Raymond will have the burden of proof to show that a gift was intended at the time of the transfer.

(August 2016)

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