Tennessee Property Division Divorce Laws & Factors | Answers to FAQs
Tennessee property division divorce laws, factors, and answers to frequently asked questions by Memphis divorce lawyer Miles Mason, Sr. serving the west Tennessee area including Germantown, Collierville, Memphis, Cordova, and Bartlett.
Who will divide our property in Tennessee?
In Tennessee, if you and your spouse can agree on how to divide your property, then your agreement will be documented in a “Marital Dissolution Agreement.” If you can’t agree, you’ll have to go to court and the judge will decide how to divide your property.
Judges have a lot of discretion about how to divide marital property. One judge may divide property one way for a couple from Covington, Tennessee, and a different judge might divide property in a different way for a couple from Fayette County, even though both couples have similar situations.
Tennessee Property Division, Laws, Factors Resources
What is an equitable distribution, and is Tennessee an equitable distribution state?
“Equitable” means fair, just, and reasonable, based on the factors set out in the law. Yes, Tennessee is an equitable distribution state. While equitable does not mean equal, most judges will admit that they begin the trial planning to award 50% of the property to each member of the couple and move one way or the other based on the evidence and arguments presented.
What factors does a Tennessee court consider in deciding property division?
- The duration of the marriage;
- The age, physical and mental health, vocational skills, employability, earning capacity, estate, financial liabilities and financial needs of each of the parties;
- The tangible or intangible contribution by one (1) party to the education, training or increased earning power of the other party;
- The relative ability of each party for future acquisitions of capital assets and income;
- The contribution of each party to the acquisition, preservation, appreciation, depreciation or dissipation of the marital or separate property, including the contribution of a party to the marriage as homemaker, wage earner or parent, with the contribution of a party as homemaker or wage earner to be given the same weight if each party has fulfilled its role;
- The value of the separate property of each party;
- The estate of each party at the time of the marriage;
- The economic circumstances of each party at the time the division of property is to become effective;
- The tax consequences to each party, costs associated with the reasonably foreseeable sale of the asset, and other reasonably foreseeable expenses associated with the asset;
- The amount of social security benefits available to each spouse; and
- Such other factors as are necessary to consider the equities between the parties
What factors does a Tennessee court consider in deciding debt division?
Tennessee law states that the court will consider the following factors:
- The debt’s purpose;
- Which party incurred the debt;
- Which party benefited from incurring the debt; and
- Which party is best able to repay the debt.
As a practical matter, where debt secures a particular asset (for example, a car loan was taken out to buy a car), a court will almost always require the party receiving the asset (for example, the car) to pay the associated debt (the car loan). If both spouses signed on the loan, the court may require the spouse who gets the asset to refinance the debt, removing the other spouse from the loan. For more, see Dividing Debt in a Divorce.
Can I get more property if my spouse is at fault?
Technically, no. In Tennessee, fault is only a factor for deciding alimony. As a practical matter, however, if a judge is presented with evidence of fault with respect to a request for alimony or attorney’s fees, there is a common belief that this can affect property division.
Is it different in other states?
Yes, every state has different laws.
By the way, can my spouse share in my inheritance from my grandmother?
An inheritance starts out as separate property. However, there’s a risk it could become martial property – and thus subject to sharing with your spouse — because of how you treat the money.
To prevent your inheritance from becoming marital property, see an attorney just in case — especially if it’s a large sum of money. Don’t commingle the money by putting it in a joint bank account. Don’t use the money to pay the mortgage on your home, or for home repairs or renovations, if your house is owned jointly with your spouse. For more, see Commingling in Tennessee: Keeping Premarital Property Separate.
It’s important to note, however, that the amount of separate property is a factor in dividing marital property. Thus, if you have an inheritance, you may get less of the marital property.
How does the court determine the value of a marital asset?
It’s easy to tell how much a bank account or publicly traded stock is worth. For other assets, if the parties can’t agree on the value, the court will decide. The parties may testify and give their opinions. For some assets, however, the most persuasive proof might be provided by an appraiser or other qualified expert. Common examples of property that might require professional testimony include businesses, pensions, jewelry, and real estate. The valuation process can be expensive, especially if both parties hire experts.
See Business Valuation in Tennessee Divorce Law for more information about valuation issues.
Once a divorce action is filed, can a spouse be restricted from dealing with marital property or his or her non-marital property?
One spouse’s right of a spouse to transfer, assign, or convey property is not restricted unless that spouse is specifically enjoined (prevented) by a court from doing so. If one spouse is concerned that the other spouse will give away, hide, or foolishly spend money, that spouse may ask the court to enjoin (forbid) certain financial activities to preserve the marital assets.
In Tennessee, what is “marital property”?
Tennessee law reads in part:
“‘Marital property’ means all real and personal property, both tangible and intangible, acquired by either or both spouses during the course of the marriage up to the date of the final divorce hearing and owned by either or both spouses as of the date of filing of a complaint for divorce, except in the case of fraudulent conveyance in anticipation of filing, and including any property to which a right was acquired up to the date of the final divorce hearing, and valued as of a date as near as reasonably possible to the final divorce hearing date…. All marital property shall be valued as of a date as near as possible to the date of entry of the order finally dividing the marital property.”
“‘Marital property’ includes income from, and any increase in value during the marriage of, property determined to be separate property… if each party substantially contributed to its preservation and appreciation, and the value of vested and unvested pension, vested and unvested stock option rights, retirement or other fringe benefit rights relating to employment that accrued during the period of the marriage.”
“‘Marital property’ includes recovery in personal injury, workers’ compensation, social security disability actions, and other similar actions for the following: wages lost during the marriage, reimbursement for medical bills incurred and paid with marital property, and property damage to marital property.”
“As used [here], ‘substantial contribution’ may include, but not be limited to, the direct or indirect contribution of a spouse as homemaker, wage earner, parent or family financial manager, together with such other factors as the court having jurisdiction thereof may determine.”
In Tennessee, what is considered “non-marital property”?
In Tennessee, “non-marital property” is called separate property. “Separate property” means:
- All real and personal property owned by a spouse before marriage;
- Property acquired in exchange for property a spouse acquired before the marriage;
- Income from (for example, rent) and appreciation (increase in value) of property owned by a spouse before marriage except when characterized as marital property;
- Property acquired by a spouse at any time by gift, bequest, devise or descent (inheritance);
- If a spouse suffers a personal injury or is the victim of a crime, pain and suffering awards, victim of crime compensation awards, future medical expenses, and future lost wages; and
- Property acquired by a spouse after an order of legal separation where the court has made a final disposition of property.
To learn more about Tennessee classification (determination of whether property is marital or separate) law, see our blog category Tennessee Property Classification.
What is the definition of “dissipation” of marital property and can you tell me some examples of dissipation?
A recent Tennessee legal opinion stated:
Trial courts must distinguish between what marital expenditures are wasteful and self-serving and those which may be ill-advised but not so far removed from ‘normal’ expenditures occurring previously within the marital relationship to render them destructive. . . . In determining whether dissipation occurred, we find trial court should consider the following:
(1) whether the evidence presented at trial supports the alleged purpose of the various expenditures, and if so,
(2) whether the alleged purpose equates to dissipation under the circumstances. . . .
The first prong is an objective test. To satisfy this test, the dissipating spouse can bring forward evidence, such as receipts, vouchers, claims, or other similar evidence that independently support the purpose as alleged. The second prong requires the court to make an equitable determination based upon a number of factors. Those factors include:
(1) the typicality of the expenditure to this marriage;
(2) the benefactor of the expenditure, namely, whether it primarily benefited the marriage or primarily benefited the sole dissipating spouse;
(3) the proximity of the expenditure to the breakdown of the marital relationship;
(4) the amount of the expenditure.”
Examples of dissipation include foolishly spending money, giving money away without benefit to the marital estate, buying jewelry for a paramour, gambling, and spending money for an improper or illegal purpose. Courts do not look favorably upon such activities. Often, courts will determine how much property was dissipated and make a substantial award to the other spouse. This award could be paid as property division or alimony in solido.
What is the process by which property and debt are distributed between the parties in a divorce trial?
In very general terms, each party is first awarded his or her separate property. Then the marital estate is divided according to the factors listed above. Finally, the debt is divided. Debt secured by specific property usually is given to the spouse receiving that property. A spouse will usually receive the debt which that spouse incurred after separation.
See the Tennessee Property Division Video Series to learn more.
If the spouses have not kept their non-marital property separate, but they have combined their ownership, how does the court decide on property division?
Spouses often commingle their marital and non-marital property. If separate property becomes commingled, it may become marital property. This can cause difficult issues for the court. If separate property can be traced easily, the court is more likely to award it to the spouse that originally owned it. If it cannot be easily traced, the court is less likely to award it to the original owner as separate property. Even if a court finds the property was once separate but became marital property, the court will consider other property division as part of the equation and look to make an equitable distribution. For more, see Commingling in Tennessee: Keeping Premarital Property Separate.
Is a professional license or degree an asset subject to valuation and division?
No. The license or degree itself cannot be divided. The professional practice or certain assets contained therein (for example, office equipment) could be subject to valuation and division in certain circumstances. Whether it is a medical practice, law practice, accounting firm or dental practice, division of professional practices can be some of the most complicated issues family lawyers can face.
For more information, see When Professionals Divorce in Tennessee: Valuing Professional Practices. And, see our Tennessee Family Law Blog category which includes many professional practice and business valuation case law summaries, updates and analysis: Business Valuation.
What about retirement accounts, pensions, and other deferred compensation?
Retirement benefits can be considered marital property and subject to division by the court to the extent that they were acquired during the marriage. In certain circumstances, appreciation (increase in value) could also be divided. These issues can be very complex.
Where can I learn more about strategies in property division under Tennessee divorce law?
Memphis divorce attorney, Miles Mason, Sr., practices family law exclusively and is founder of the Miles Mason Family Law Group, PLC. Check out The Tennessee Divorce Client’s Handbook: What Every Divorcing Spouse Needs to Know, available on Amazon and Kindle. To schedule your confidential consultation, call us today at (901) 683-1850.
References, Resources and More:
- Property Division in Tennessee Divorce
- When Professionals Divorce in Tennessee: Valuing Professional Practices
- Business Valuation in Tennessee Divorce Law
- Property Division – Tennessee Family Law Blog for analysis, commentary, updates and case law summaries
- Tennessee Law – Legal & Legislative Materials Available @ the Tennessee State Library & Archives
- Tennessee Laws (including divorce and property division)
- Breakin’ Up Is Hard to Do | Tennessee Bar Association – Property Division in Tennessee
- American Bar Association – Law in the 50 States
- Tennessee Administrative Office of the Courts – Approved Divorce Forms