Dealing With The Division Of Luxury Items On Divorce

When considering the division of the matrimonial pot in a divorce, parties can sometimes overlook the importance of individual items, known as ‘chattels’, and whether they have value.

The importance of considering the division of chattels is increasing, especially as luxury items are increasing in value. Labour costs of luxury items have increased as of late which has increased the market price of products, and therefore items can be considered an investment.

You may yourself own a luxury handbag, a watch, or other items such as jewellery or rare whiskey. These are just a few examples of what could be considered a chattel, and a luxury item. Such items are not excluded from the division of the matrimonial pot, as they can be considered assets that hold a significant value.

During the course of a divorce, whether you are attempting out-of-court resolution or are within court proceedings, the disclosure of each parties’ assets is a key point. This is to ensure that everyone is aware of what forms a part of the matrimonial pot. Items that are worth more than £500 should be included as part of the disclosure, but this can be overlooked or omitted. Where possible, there should be disclosure from the outset, so as to avoid unnecessary time wasted on investigating missing or omitted items from disclosure, and therefore saving costs overall.

Start division of chattels early

The Family Court encourages parties to deal with the division of chattels as early as possible in divorce proceedings. Judges are often disappointed to find that parties have left the division of items to the last minute, which can sometimes cause agreements on other aspects of the matrimonial pot to fall apart. Parties should work on ensuring that there is an agreed list of items, whether the matter is dealt with by consent or through court proceedings, and any items that are not agreed upon can be narrowed down and dealt with. Parties are encouraged to use other forms of dispute resolution where possible to deal with these issues, such as mediation or arbitration, instead of taking up further court time.

The court will also take into consideration whether an item is matrimonial or non-matrimonial. A matrimonial item will have been acquired during the course of the marriage, likely using matrimonial funds. Non-matrimonial items are often inherited or were acquired prior to the marriage. The court will use the Section 25 factors from the Matrimonial Causes Act 1973 to determine the division of matrimonial assets, including chattels. Generally, the division of items will form part of a party’s needs, and any assets that exceed a party’s needs will be shared between the parties.

How does this deal with luxury items?

The court will take into account why a party is seeking to retain a particular item, especially if this is one that is used more frequently, or if it is an item that may hold an investment value or is considered to be an heirloom. The court will of course consider the division of items on a case-by-case basis but will generally follow the rule of considering the parties’ needs first and sharing all else which falls beyond their needs.

During a divorce, expert evidence for the value of items can be necessary, though family solicitors will always consider the proportionality of obtaining such evidence, due to the level of costs in comparison to the possible value of an item. However, such reports and evidence can help parties to agree on a precise value for luxury items for the purposes of negotiation. Family solicitors can also use informal methods of valuation, such as using investment indexes or valuation/auction services.

It is appreciated that parties may hold an emotional connection to specific items and may wish to keep them for sentimental reasons. However, it must always be considered as to whether a party has specific use of an item, or if it is simply gathering dust.

Couples that have luxury items, or perhaps inherited or non-matrimonial assets, may wish to consider entering into a pre-nuptial or post-nuptial agreement, which can set out how assets are to be divided if they separate. Nuptial agreements are not binding and cannot oust the jurisdiction of the courts, but can be upheld by the court if the factors from the case of Radmacher v Granatino are met. This is to say, the parties should always seek to ensure that there is disclosure at the time of entering into the agreement, and further, each party must have the benefit of independent legal advice.