- Rules about selling your wedding ring during divorce
- Getting divorced and need cash?
- What to know about marital gifts
- When was the ring received?
- What about post-wedding gifts?
- Handling post-wedding gifts in a divorce
- Proving a marital gift only belongs to you
- Risks and consequences of selling too soon
- Conclusion
As you face divorce, it’s important to prepare yourself for your new beginning. Part of that preparation may include taking an inventory of your financial resources and what you’ll need in your post-divorce life.
You’re well within your right to want to sell items that could provide you with some important cash after your divorce. But before you sell anything prior to your official divorce decree, you’ll want to make sure that the property is yours to sell. This includes your wedding ring.
Bottom line: Yes, often you can sell it. But there are some rules.
Rules about selling your wedding ring before your divorce is official
Before you sell marital gifts like jewelry, there are some important considerations to keep in mind – even if you paid for it:
- Legal considerations: Depending on your jurisdiction, these items might be considered marital property. Selling them could affect the division of assets in the divorce.
- Agreement with spouse: It might be best to discuss the sale with your spouse or wait until the divorce settlement is finalized to avoid potential disputes.
- Sentimental value: Consider the emotional and sentimental aspects of selling items.
- Financial impact: Selling the ring could impact your financial situation during the divorce proceedings.
If you really need to sell items, you might want to get legal advice. Keep reading to learn more.
Getting divorced and need cash ASAP?
Divorce can take a big financial toll on a couple. While married, you and your spouse both contributed to one household. But once your divorce is final, that one household becomes two.
In your divorce proceedings, you are subject to your state’s laws regarding property distribution. Each of you can have your share of the marital property – both assets and debts – but that division of property may have yet to be determined.
It stands to reason that you’re looking at the expensive ring on your left finger as a potential source of cash. There’s no reason to keep it. Why not liquidate it to benefit your future? But legally, there may be a question about whether it’s really yours to sell. Do you have to divide your ring’s value with your soon-to-be ex?
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What to know about marital gifts
In most cases, anything you and your spouse acquired during your marriage is considered marital property. As such, it must be divided according to the divorce laws of your state. This pertains to every item you and your spouse owned as a couple, including gifts.
But what about the gifts you give to each other?
Divorce laws differ from state to state. Interspousal gifts may be viewed differently from other gifts you received during your marriage. Some states consider gifts given to each other during the marriage as marital property. Others consider these gifts as separate property owned by the individuals, providing they can prove that they were gifts.
Here are some fictional examples of how states handle marital gifts.
California
Pre-wedding gift:
- Scenario: John receives a designer watch from his parents as a wedding gift before his marriage to Emily.
- Treatment: California is a community property state, so a pre-wedding gift given to one spouse is considered separate property. John can keep the watch.
Post-wedding gift:
- Scenario: During the marriage, Emily receives a piece of expensive jewelry from her aunt.
- Treatment: Post-wedding gifts given only to one spouse in California are also considered separate property. Emily keeps the jewelry as her separate property.
New York
Pre-wedding gift:
- Scenario: Sarah receives a car from her parents before her marriage to Tom.
- Treatment: New York follows equitable distribution rules. Pre-wedding gifts are considered separate property. Sarah can keep the car.
Post-wedding gift:
- Scenario: Tom receives a valuable painting from his friend during the marriage.
- Treatment: Similar to California, post-wedding gifts given specifically to one spouse are considered separate property. It’s Tom’s, and not included in the marital property for division.
If, in any of these scenarios, the items were gifted specifically to both spouses, the property could have been considered marital or shared property. How does this knowledge affect what you can do with your wedding ring? Here are some more things to consider.
When was the ring received?
Let’s say you received your engagement ring from your spouse at the time of your engagement, i.e., before you were married. You received your wedding ring during the ceremony, i.e., at the time of your marriage.
Depending on your state laws, your engagement ring may be considered separate property – or property you acquired before marriage. The wedding ring may be considered marital property subject to division.
Some states may consider the engagement ring a “conditional gift” to be returned to the spouse who purchased it. Some states may consider both spouses’ rings as marital property. Still, others may consider interspousal gifts to be separate property to be kept by each individual.
In other words, whether your wedding ring is your separate property or not depends on where you’re seeking your divorce. Your best bet is to find out your state’s divorce laws. Consult a legal coach for advice if need be.
What about post-wedding gifts?
Typically, any gifts you received from others as a couple during your marriage are considered marital assets and must be divided according to state law. Gifts from others to individual spouses would typically be considered separate property in the property distribution.
But this can be tricky. Was a cash gift directed toward just one of you deposited into a joint account? If so, it became commingled property at that time. Was one of you given a car or piece of real estate that later became titled under both names? Did both spouses pay for the care and upkeep of that car or real estate? If so, they can also be considered marital property and subject to division, even if the gift was intended for one spouse alone.
Handling post-wedding gifts in a divorce
In general, follow these steps:
- Documentation related to the gift: Provide documentation such as a letter or note indicating the gift was intended solely for the recipient.
- Avoid commingling: Keep monetary gifts in a separate account.
- Seek legal advice to understand specific state laws and ensure the gift is properly categorized as separate property.
Proving a marital gift only belongs to you
If you want to retain interspousal gifts as separate property in your divorce, your state laws will prevail.
If your state says that interspousal gifts are considered marital assets, they will need to be divided in the divorce. If your state law says that interspousal gifts are considered separate property, then it is yours, provided that you can prove it was given as a gift with the intention that you keep it.
The thing is, gifts between soon-to-be spouses are given in the spirit of getting married and the anticipation of saying, “I do.” They aren’t given with the express intent to be split one way or another in the event of a divorce. But intent is exactly what you may need to prove if you plan on claiming these gifts as separate property in your property settlement negotiations.
Risks and potential legal consequences of selling marital property before the divorce decree
Risks:
- Legal repercussions: If there are court orders or agreements in place regarding the handling of marital property, selling assets without permission can lead to being held in contempt of court. Courts can impose penalties for violating these orders, which might include fines or other sanctions.
- Financial consequences: Selling assets too hastily might result in receiving less than their fair market value, leading to financial loss. Certain assets can trigger tax liabilities that need to be carefully considered.
- Equitable distribution issues: The court may adjust the final property settlement to account for the sale, which could result in an unfavorable distribution for the selling spouse, who might be required to reimburse the marital estate for the value of the sold property.
- Impact on negotiations: Selling assets can lead to a breakdown in trust between spouses, complicating negotiations and potentially leading to a more contentious and prolonged divorce process.
Potential legal consequences:
- Court orders and injunctions: Some states have automatic restraining orders or other orders that prevent the sale or transfer of marital assets once divorce proceedings are initiated.
- Accounting for sold property: Both spouses are typically required to disclose all assets, including those sold before the divorce decree. The value of the sold property may be deducted from the selling spouse’s share of the marital assets, potentially leading to an inequitable distribution.
- Claims of dissipation: If one spouse sells or wastes marital property, the other spouse can claim “dissipation of assets.” The court may compensate the affected spouse by awarding a larger share of the remaining marital assets.
- Revisiting the settlement: If it is discovered that significant assets were sold without consent, the court might revisit and modify the property settlement to ensure fairness.
Conclusion
Before you sell any property pre-divorce, you should first understand the laws of your state and its property distribution rules. Unless you’re sure an item is your separate property under those laws, you could get yourself into a sticky situation by selling anything before your divorce process is complete. This includes your wedding ring.
In the best-case scenario, you and your soon-to-be ex will amicably negotiate and agree on your property division terms, and you will get what you really want in your divorce settlement. A divorce mediator that you both like and trust may be your best guide through this process.
If you end up coming away with your wedding ring, the dress, or any other items that you no longer need or want, there is a silver lining. Worthy.com provides an easy and stress-free way of auctioning your wedding ring or other fine jewelry. There are also other resources where you can sell or donate your wedding dress or other reusable wedding mementos.
If you’re facing a divorce, don’t do it alone. At Hello Divorce, we are here to support you. Schedule a free 15-minute phone call to speak with an account coordinator. We’re all about fresh starts here, and we’ll help you get yours.
