From Rolex watches to Birkin handbags, there is a rise in divorce proceedings over the value of these luxury items. Many clients want to know whether they must disclose the Mulberry handbag they were gifted, or the Rolex purchased for a special birthday and more importantly, they want to know how the court will approach these items when awarding a divorce settlement. 

Should you disclose your designer watch or handbag?

For those going through divorce proceedings or about to start, lying in your wardrobe or sitting on your wrist may be an item that you have to disclose in your divorce. Within divorce proceedings, the parties must disclose assets worth more than £500 in their respective Form E’s (financial statement) in section 2.8. Some luxury goods can get overlooked when listing assets as clients often believe they will not be worth £500 as they are second-hand goods. But this needs to be checked as many of these luxury items are increasing in value in the second-hand market. Bonhams is an international auction house offering free auction estimates for watches, fine art, jewellery, cars and memorabilia. 

How courts treat luxury items

Luxury items are personal items and are known as chattels, be they matrimonial or non-matrimonial. Matrimonial assets are generally ones built up during the marriage, (the marriage period being from cohabitation to separation) or afterwards but purchased with matrimonial funds. Non-matrimonial assets can be inherited, acquired pre cohabitation or acquired after separation.

If the items are matrimonial assets, they are included in any computation for divorce settlement. The court can redistribute assets. However, generally, if they are personal belongings purchased by you or gifted to you, they are for you to retain but their value will be included in any divorce settlement. If there is a dispute about who should retain the personal belongings, the courts are reluctant to become involved and often mediation or arbitration may be a better venue for such arguments.

In one case, the court had directed each party to draw up a list of favourite items in descending order and then make an alternate choice until the lists were exhausted. 

Any items not claimed are sold and net proceedings are divided equally. If one party obtains more than 50% of the value of the personal items, the other party will be recompensed. 

Non-matrimonial assets are treated differently by the court in that unless a party’s needs require them to be considered, the courts don’t generally include them so that, for example, an inherited watch is likely to stay securely on your wrist and its value not included in the divorce settlement.

Pre and Post Nuptial Agreement

A prenup or even a post-nuptial agreement, whilst not legally binding on the family court, is still an important consideration by the court and likely to be upheld if fair. A nuptial agreement can deal with inherited items, pre and post-marriage acquired items as well as gifts between the parties and from third parties. It is, therefore, advisable to enter into a nuptial agreement to prevent arguments arising over such luxury items in the future should you divorce.

If you would like advice and support regarding your divorce and/or financial settlement contact our Family Law team. We offer an initial Fixed Fee meeting which gives you an hour with a specialist family lawyer - click on the link below to find out more. Call 0330 0945 500, email family@nevesllp.co.uk  or complete our Contact Form and we'll get back to you.