Premarital Property Remained Separate Property Despite Couple Securing Line of Credit

Luplow v. Luplow, 450 S.W.3d 105 (Tenn. Ct. App. 2014).

Premarital Property Remained Separate Property Despite Couple Securing Line of Credit

Mary Lisa Gaston Luplow and Martin Luplow were married in 1983 and had two children.  In 2010, the wife filed a complaint for divorce in Davidson County, Tennessee, alleging inappropriate marital conduct and irreconcilable differences.  The husband filed a counterclaim, alleging the same grounds.  After various pretrial orders, a trial was held in 2012 before Judge Phillip R. Robinson, and a final judgment was entered.  Both parties appealed to the Tennessee Court of Appeals.  The husband appealed the classification of one piece of real property, which the trial court had found to be the wife’s separate property.

After addressing other issues, the appeals court turned to the status of the real property which the wife had inherited when her father died.  The husband argued that this property had transmuted into a marital asset because they took out a line of credit against the property, and because he had paid a portion of the property taxes during the pendency of the divorce.  The lower court had found that the property had not transmuted, and the appeals court noted that this is a factual determination that has a presumption of correctness.  It examined the evidence and concluded that the evidence did not preponderate against the trial court’s findings.

The husband also argued that he had paid the taxes on the parcel one year, but the Court of Appeals also held that this factor was insufficient to transmute the property.

Even though the appeals court agreed that this property was the wife’s, it did not agree with the disposition of the line of credit secured by the property.  The lower court had found that the line of credit against this property was solely the wife’s responsibility.  But since both parties had incurred this debt, the Court of Appeals held that it was a joint obligation.

For more discussion of this case, see TN Husband Must Pay for Workplace Malfeasance in Divorce.

This post is part of a series, Appreciation of Separate Property: The Forensic Accountant’s Full Employment Act.