As a general rule, property acquired before marriage is not subject to equitable distribution upon divorce. So what about the engagement ring? If you follow the rule of thumb recommended by the jewelry industry (the ring should represent two months of the buyer’s salary) it can be a significant asset. Traditionally it is given by one party to the other before marriage occurs, so is it not subject to equitable distribution?
First, the courts almost universally agree that an engagement ring is a conditional gift given by one party to the other in contemplation of marriage. If the marriage never occurs then the ring (or its fair market value) is to be returned to whoever purchased it. This is true regardless of who backed out of the marriage or whose fault caused the canceling of the marriage.
Courts, however, don’t agree on how to treat the ring after marriage occurs.
In Pennsylvania, property acquired by gift to either party is (generally) not considered marital property (and not subject to equitable distribution upon divorce) except when the gift is between spouses. Further, Pennsylvania treats the giving of an engagement ring as a conditional gift with an implied condition that the marriage must occur in order to vest title in the recipient. Thus, even though the ring is given to a party prior to the marriage, title does not vest in the recipient until the parties are married. In other words, the value of the ring is considered part of the marital estate and it is subject to equitable distribution upon divorce.
New Jersey, however, views the matter differently. While acknowledging that an engagement ring is conditional in nature, New Jersey courts have ruled that the ring unconditionally becomes the property of the recipient upon marriage and retains its character as separate property intended for the sole use of the recipient after marriage and therefore not subject to equitable distribution; the recipient keeps it free and clear.