Can I pawn my wedding ring? (And Other Examples Applying The Statutory Injunctions in a Divorce)

T.C.A. §36-4-106 says that neither spouse going through a divorce may transfer, assign, borrow against, hide, dispose of, or dissipate any marital asset. In English, this means you can’t sell, give away, pawn, borrow against, or throw away anything that was acquired during the marriage. The reason for this court order (that lawyers call a statutory injunction) is to make sure that a court can fairly divide marital assets and marital debts. To do that, the Court needs a “freeze” on big ticket items getting sold before the divorce is over.

So what do you do if you need money, now, but are in the middle of a divorce, without breaking the law? Here are some options:

Option 1: Sell or borrow against something that you had prior to getting married. Things that you owned prior to getting married are not “marital.” They are considered “separate” property and you can do with these things whatever you want. Even that can get complicated, so be careful. For instance, if you inherited land from your parent AND spent no money during the marriage to make the land nicer, you are likely safe to borrow against that land. However, if you built a cabin on that land, it may be considered marital property.

Option 2: Sell or borrow against something that was truly given to you. For instance, most courts will let you pawn your wedding ring. However, be careful about pawning other jewelry because sometimes, your spouse will claim other jewelry was an “investment.” Be sure you can prove, through a piece of paper or the testimony of someone other than yourself, that the jewelry was a gift. This same rule goes for any gift, such as a gun or a piece of real estate, or a government bond – make sure you can prove it was a gift to you, not a gift to both of you, and not an investment.

Option 3: Risk it. Sell or borrow against something, knowing it is something that is part of the marital estate (meaning something that you and your spouse bought during the marriage). This is a problem strategy and we almost always advise our clients to never do this. Sometimes, our clients do not take our advice or can’t take our advice. Just know that the court might find you “in contempt” for selling or borrowing against a marital estate while the divorce is pending. You risk getting jailed and/or fined, if your spouse files a Motion and the Court, after a hearing, concludes: (1) that the asset was marital, not your separate property (see above); (2) that you got rid of the asset or borrowed against the asset on purpose, and (3) that you were being wasteful. So, for example, if you have to pawn a ring to make a car payment, you might be OK because, while you pawned the ring, you did it only to protect the car. Do beware that even if you acted with pure motive, you are going to pay a lawyer to defend you in a hearing, and you are risking jail time if you get it wrong, so talk to a lawyer before you take such a risk. Also beware that if you do get rid of a marital asset, chances are that, at a minimum, ½ of what you got rid of is going to be counted against you when the divorce is over.

So, for example, taking your girlfriend and her children on vacation and paying for it by selling real estate is a bad idea. Borrowing against your retirement account to keep your house out of foreclosure might be allowed – especially if you tell everyone in advance what you are doing and why. Ideally, you get their agreement or can get permission from the court to cover yourself. The worst thing you can do is to try to hide getting rid of a marital asset. Any halfway competent lawyer will catch you, and Judges hate nothing more than learning that a spouse tried to get rid of a marital asset and lie about it.