Sentimental Items in Property Settlements

The Federal Circuit and Family Court of Australia (the court) aims to make property settlement orders that provide a “just and equitable” outcome for separating couples. However, determining what is just and equitable can be difficult when the property pool includes items that hold a personal and emotional significance beyond their monetary worth. Sentimental items such as heirlooms, beloved jewellery and other items of personal value (including family pets) are considered “property” for the purposes of a property settlement. There is no specific reference to “sentimental items” in the Family Law Act 1975, but the court has acknowledged the unique significance of some assets when determining how they should be allocated. This article looks at how sentimental items are usually treated in family law property settlements in Australia.

Private property settlements

In most cases, separating couples come to a private agreement about the division of assets. In more difficult situations, this might require engagement with mediation or other dispute resolution processes that help former couples to reach an agreement. During these negotiations, the parties can agree on the allocation of sentimental items without regard to the market value of the items. This type of collaborative process allows couples to discuss the importance of sentimental items and reach agreement with respect for each other’s attachment to property.

Court orders

In some cases, a former couple are not able to reach an agreement, even with the assistance of an independent third party. When the parties need to turn to the court for a decision, they submit themselves to the independent assessment of an impartial adjudicator. This can mean that the court may make a decision that does not account for the personal idiosyncrasies of the situation, such as attachment to sentimental items.

When determining a property settlement, the court begins by assessing the total value of assets in the property pool based on the market value of each item (less any liabilities held by each person). The court takes account of how the assets were first acquired, each party’s contributions to maintaining the assets, as well as other contributions to the relationship, and the future needs of each party. The court can then make property settlement orders, often directing the couple to fairly divide the asset pool, perhaps selling some property and sharing the profits. Sometimes one person will buy out the other’s share of an asset so that they can keep sole ownership.

Assessing ownership

When determining the allocation of some assets, the court will look at how a sentimental item was originally acquired and the history of ownership. For instance, the court is more likely to allocate the item to a person if it was passed down through generations of their family or received as a personal gift. Personal gifts received by one spouse before and during the relationship are generally seen as the belonging to the recipient. If both parties agree, the court can exclude these personal gifts from the divisible asset pool. However, if the parties do not agree, the court is likely to still consider items of significant value in the settlement.

Sentimental items with market value

When a sentimental item also has a clear market value (such as antiques, valuable jewellery or rare collectibles), the item’s value will be critical in the court’s decision on allocation. However, the court will still give consideration to any special value attached to the item. In such cases, the court may decide to allocate the item to the person with the stronger emotional attachment, particularly if they owned it prior to the relationship. For instance, if one spouse wants to keep a vintage car with high sentimental and actual value, the court may agree, but allocate an equivalent amount of value to the other party from the marital asset pool.

However, the court must balance the rights of both parties, and if there is insufficient total value in property pool, will probably order the asset sold and the profits shared between the parties. This is most common when the sentimental attachment is to a home that constitutes the bulk of the property pool. In that case, the sale of the property may be unavoidable, even if there is considerable sentimental attachment and family history in the property. Occasionally, if someone cannot afford to buy out the other person’s share in a sentimental item, the court may still allow them to keep it to avoid undue hardship. This typically only applies when the item is not only sentimental but has practical use (such as tools of a trade or a vehicle necessary for transport).

Sentimental items without market value

The court also recognises that the continued possession of an item may be important even if the item does not have a true market value. In that case, one party may offer to make a financially disproportionate exchange for the item. This is only acceptable when the court feels that the negotiated agreement is fair and just to both parties. The court is unlikely to endorse a clearly disproportionate arrangement that could be seen as exploitative of the sentimental attachment of one party.

Some sentimental items, such as memorabilia, family photos and children’s artwork can carry shared memories that have meaning for both parties, even if the item has no market value. When considering these items, the court may encourage the parties to reach an agreement about fairly dividing these items or making copies where possible. For sentimental property that cannot be divided, such as a family pet, the couple may even alternate possession so that they can both keep a connection. In cases where the couple have children, the court sometimes allows one person to keep hold of a sentimental item until it can be passed to the children themselves.

While sentimental items are still technically classified as property and part of the asset pool for distribution, the court has acknowledged their unique value beyond market price. The court has exercised its discretion to consider emotional attachments, acquisition and history of ownership. Ultimately, the allocation of sentimental items is best resolved through negotiation and mediation, where both parties can openly discuss the matter.

Go To Court Lawyers can provide advice about the division of special, sentimental items in property settlements. Please contact our offices on 1300 636 846 for any legal assistance.