Interest in Gifted Family Partnership Was Separate Property

The husband and wife in this Williamson County, Tennessee case were married in 2004.  The husband was a realtor who specialized in farmland, and the wife was a stay-at-home mom for most of the marriage.

About nine months before the marriage, the husband’s father purchased 200 acres, and allowed the husband to purchase fifty acres of that parcel.  During the marriage, the husband and wife build a cabin on the property, mistakenly believing that it was on the husband’s parcel.  It was, however, actually on the father’s parcel, and the father executed a quitclaim deed conveying a 7.6 acre parcel on which the cabin was located.

The father also started a limited partnership during the marriage, and the husband and his sister were beneficiaries of a trust owning a 98% interest.  The husband managed leases on the property held by that partnership.

In 2020, the wife filed for divorce, and the case went to trial in 2022.  The parties resolved the parenting issues, but there was a dispute as to the classification of a number of assets, specifically, the 7.6 acre cabin property, and the husband’s interest in the partnership.  The lower court held that both of these assets were marital property.  After final rulings in the case, the husband appealed to the Tennessee Court of Appeals.

After addressing questions of the husband’s income, the court moved to the issue of the property classification.  It noted first that property acquired during the marriage is presumed to be marital property, but this rule generally does not apply if it was by gift or inheritance.

The Court of Appeals looked first at the partnership interest.  The husband testified that he believed the interest was a gift, but that must be determined from the totality of the circumstances.  The appeals court found it significant that the husband’s interest was equal to that of his sister.  Cases of gifts to multiple children have been held to be separate and not marital property in previous cases.  The court therefore agreed with the husband that it was separate property.

The wife argued that she had substantially contributed to the property during the marriage, but the Court of Appeals held that the contribution was not substantial.  Therefore, it remained separate property.

The appeals court then turned to the cabin property.  In this case, it agreed with the lower court that it was marital property.  Significantly, the lower court found that the cabin was conceived as a marital home. Therefore, it affirmed this portion of the lower court’s ruling.

After addressing alimony and attorney fee issues, the Court of Appeals affirmed in part and reversed in part.

No. M2023-01449-COA-R3-CV (Tenn. Ct. App. Feb. 3, 2025).

See original opinion for exact language.  Legal citations omitted.

To learn more, see The Tennessee Divorce Process: How Divorces Work Start to Finish.

To learn more, see Property Division in Tennessee Divorce and view our video Is Tennessee a 50 50 divorce state?