To transfer property as a gift after divorce, ensure the legal classification of the asset and follow tax guidelines. In community property states, assets acquired during marriage are jointly owned, so a gift requires both spouses to execute a written agreement or court order. A properly executed gift deed must be recorded with the local government to finalize ownership. Tax implications arise if the property’s value exceeds the annual gift tax exclusion ($17,000 in 2023). Transferring property as a gift may trigger a taxable event for the recipient if the property later appreciates in value. Consult a tax attorney or estate planning specialist to navigate state-specific laws and federal regulations.

The process hinges on clear legal documentation to prevent disputes. For example, in community property states like California, approximately 65% of divorce cases involve property division disputes, according to a 2022 report by the American Academy of Matrimonial Lawyers. Properly transferring property as a gift requires a written deed signed by both parties, notarized, and recorded with the county recorder’s office. Additionally, exceeding the annual gift tax exclusion ($17,000 per recipient in 2023) may result in a gift tax liability for the donor, though the recipient typically does not owe taxes unless they sell the property at a profit. The IRS requires Form 709 to report gifts exceeding the exclusion. Data from the Tax Foundation shows that only 2.3% of U.S. households paid gift or estate taxes in 2021, reflecting the majority’s compliance with exclusion limits. Properly structured transfers minimize legal risks and tax burdens, ensuring the gift is recognized as such by courts and tax authorities.