As an Asian woman and lawyer, I regularly get asked questions in relation to gold and jewellery and what happens to this on a divorce. I have a number of cases currently where the gold and jewellery is a central issue. It is customary in South Asian culture to adorn the bride and sometimes even the groom with gold and jewellery, this has been a long-standing practice and one that I do not see changing. Even if the jewellery is not worn, it is still an important gift, being treated as an investment for the marrying couple for their future.
With the growing number of divorces within the British Asian community, the question of what happens to the gold and jewellery is coming up more frequently. I often have clients worrying about what will happen to the gold and jewellery they have gifted or received and how this gold and jewellery should be presented in the Form E, which asks about pieces valued at more than £500.
When a marriage breaks down, both sides of the family may have an expectation that the gold and jewellery they have given will be returned. Sometimes these can be family heirlooms or items passed down from elders. There is also the issue of costs of (a) insuring the gold and jewellery and (b) keeping it stored in a safety deposit box. The costs, responsibility and payment for future insurance and storage will need to be resolved.
Types and Valuation of Gold and Jewellery
Typical jewellery items are the Mangalsutras (combining diamonds and gold), Jumaka, Karas and Kuda which can be significantly valuable and important. Where jewellery is not wanted, gold coins or bricks are given. The value is usually determined by the weight of the item against the price of gold at the time, and not the insurance value which usually reflects the cost of replacement.
One party may deny any knowledge of the whereabouts of the gold and jewellery and deny possession of it. Sometimes the most difficult hurdle to overcome is providing evidence to the Court of the existence and whereabouts of the jewellery.
Legal perspective and treatment of Gold in Divorce
The English Courts are guided by English legal principles and not the customs of any one particular culture. It is important to remember that, where a gift is given, it belongs to the person it has been gifted to regardless of the length of the marriage or that it originated from one side of the family. The gold and jewellery does not belong to the family that gifted it any longer. Upon divorce, the gold and jewellery are likely to become part of the “matrimonial pot” and be treated as a matrimonial asset. Just as with other assets in the marriage the gold and jewellery will be divided during the financial settlement.
Offsetting Gold against other assets
Within matrimonial settlements gold and jewellery can sometimes be “offset” against other assets. This is especially relevant where the gold and jewellery is of substantial value when compared to the other assets in the marriage. The gold and jewellery is not viewed in isolation to other matrimonial assets and its value will be factored into the overall settlement, and to convince the Court this is his/her possessions and is being retained by the other. If ownership or possession of the gold and jewellery is denied by one spouse, the Court will have to decide this on the evidence. If the Court believes that one spouse does actually have the gold and or the jewellery despite the legal denials. The Court can adjust the financial settlement to take that value into account.
Tips on protecting Gold and Jewellery
If you or your family are gifting your spouse with gold and jewellery, you may want to consider:
- Taking photos – this is always helpful as it clearly identifies each item(s) rather than just “gold necklace”.
- Keeping receipts – keep receipts of all of the gold purchased with a detailed description of the jewellery and the weight of the gold. It can be used to obtain a future valuation.
- Record the gift – make a record of the intention behind the gift. Has the jewellery been passed down on one side of the family or it is really a loan and something that will need to be returned if there is a divorce.
Planning ahead with Pre or Post-Nups
When parties are preparing for their marriage, the last thing they may want to do is think about a divorce, but just as pre-nuptial agreements are becoming more widely used, a couple may want to consider a pre-nuptial agreement (or a post-nuptial agreement after their marriage) to address what will happen to the gold and jewellery if there is a divorce, both of which our expert team of family lawyers can assist with.