Pennsylvania divorce courts have statutory authority to divide all marital property, which includes all property acquired from the date of the marriage through the date of separation, unless an exception applies. One exception is that property acquired by gift is not considered marital property and thus is not subject to equitable distribution by a divorce court. However, gifts between spouses are considered marital property subject to equitable distribution.

Since an engagement ring is exchanged prior to the marriage, Pennsylvania courts agree that an engagement ring is a conditional gift given by one party to the other in contemplation of marriage. The ring becomes the separate property of the recipient upon the marriage. However, if the engagement ring is improved during the marriage, the increased value of the ring may be considered marital property subject to distribution between the parties because the upgraded portion would be a gift between spouses. Wedding bands exchanged by the parties will be treated similarly in divorce cases.

If the parties do not marry, the engagement ring should be returned to the donor because the engagement ring is a conditional gift. Even if a person accepts a marriage proposal, this does not mean that the recipient can retain the ring if the marriage does not occur.