Tag: gift

What happens to the engagement ring if the marriage is called off ?

by Jonathan C. Noble, Esq.    3 minute read

State law will usually determine what happens to an engagement ring if the marriage is called off. 

Under current Pennsylvania law, an engagement ring is a conditional gift based on the promise to marry. Up until the marriage actually takes place, the ring remains property of the purchaser or donor. Once the marriage takes place, the engagement ring becomes a separate asset of the recipient.

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What happens if the purchaser breaks off the engagement? 

Under Pennsylvania law, if the purchaser breaks off the engagement, the engagement ring still remains their property. In Pennsylvania, it is the same result no matter who broke off the engagement. Even if the recipient of the ring was ready, willing and able to marry (even standing at the altar, in wedding attire, holding the caterer’s bill) and the donor refuses to get married, the donor is still entitled to return of the ring (or it’s value). Pennsylvania takes a “no-fault” approach to the return of an engagement ring. Pennsylvania courts do not and cannot get involved with sifting through the debris of the broken engagement in order to ascertain who is truly at fault and if there lies a valid justification excusing fault. Other states may take a different approach to resolving engagement ring disputes.

This issue was decided by a split Pennsylvania Supreme Court in 1999 in the case Lindh v. Surman, 742 A.2d 643 (1999).

Hopefully, the readers of my blog will never face this situation. Engagement ring disputes can and do happen more often than many people realize.

Lawyer Jonathan Noble | Top Attorney Prenuptials

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Providing money to your child for the down payment of a house – is it a gift or a loan?

It is somewhat common for a parent to provide funds to their child for use as a down payment on a marital home. The amount is often substantial. Depending on the facts surrounding the transfer of funds, it may be a good idea to document whether the funds are a gift or whether the funds are a loan.

Jonathan C. Noble, Esq.
Providing your married children with funds to purchase a home is fairly common. It may be helpful to think about whether the funds will be viewed as a gift or viewed as a loan in the event your child is faced with divorce.

Why is this important?

If the funds are a gift to your child, and the funds are not traceable and/or commingled with marital funds, then used to purchase a marital residence, the funds become a marital asset, subject to equitable distribution in the event of a divorce. This is usually the position of the spouse of the donee. If your position is that the down payment funds were given as a gift, it would be helpful to produce the gift letter and perhaps a copy of the check that the donor signed.

If the funds are a loan, the loan must be repaid. If the house is sold due to divorce, or the title of the house is transferred due to divorce, you may be entitled to have the loan repaid from the proceeds of the sale or transfer. This is usually the position of the child of the creditor parent making the loan. If your position is that the funds were a loan, and therefore must be repaid, it would be helpful to produce an amortization or payment schedule, a promissory note showing the rate of interest charged, and proof of at least some repayment.

This post is simply to have you think about two of the many options you may have when providing a significant amount of funds to your married children.

No two family law matters are exactly alike. Nothing on this family law blog should be considered or used as legal advice. Nothing can replace consulting an attorney licensed in your jurisdiction, regarding your particular family law matter.

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