Husband Failed to Prove Prenup to Reserve Lake House as Separate

Tennessee case summary on property division, classification, retirement and prenuptial agreements in divorce.

Jimmy D. Ogle v. Julie D. Duff

The husband and wife in this Loudon County, Tennessee, case were married for about five and one-half years before their divorce.  The husband, 58, was a self-employed surveyor, and the wife, 45, was a teacher.   The trial court granted the divorce and classified and divided the property.

During the marriage, each spouse maintained separate accounts for their earnings.  At  the time of the marriage, the husband held three IRA’s with a value of over $120,000.  They were rolled over, and the remaining account had a balance of about $180,000 at the time of the divorce.  The husband also owned a lake residence prior to the marriage, and during the marriage, this was transferred to a revocable trust.  The husband argued that the parties had a postnuptial agreement that the trust was his separate property, but the trial court found that there was insufficient evidence to find the existence of a valid agreement.

After trial, the husband appealed to the Tennessee Court of Appeals.  He argued that the trial court erred in finding the increase in value of the lake property to be joint property.  He also argued that it was error to find the increase in value of the IRA to be joint property.

The appeals court began by looking at the evidence of any postnuptial agreement.  The husband argued that the trust documents and accompanying deeds were sufficient evidence of the agreement, since the wife executed a deed transferring any interest she held to the trust.

The trial court held that there was no such agreement, because there was insufficient evidence of mutual assent.  The wife, however, had made a recording of the discussions prior to creating the trust, and a transcript of that tape was offered into evidence.  The discussion focused on protecting the property from potential lawsuits, but nothing was said about the possibility of divorce or separation.

The husband argued that the trust documents and deeds were sufficient to show a valid agreement.  But since none of the documents mentioned divorce or separation issues, the lower court had held that it did not constitute a valid postnuptial agreement.

After reviewing all of the evidence, the appeals court agreed that there was insufficient evidence of a valid postnuptial agreement.  For that reason, it affirmed the lower court’s finding.

The court then looked at the classification of the property, turning first to the lake property.  The husband argued that the increase in value was due to improvements.  However, the trial court had found that the husband’s testimony was of questionable credibility.  For that reason, the appeals court held that the lower court had acted properly in making its ruling.

The husband argued that since he made no contributions to the IRA during marriage, that the increase in value was his sole property.  He cited an earlier case in support of his position.  The appeals court agreed that the rule of that case applied.  There was no evidence to show that the wife had contributed to the increase in value of the IRA.  For that reason, the appeals court reversed this portion of the lower court’s ruling.

After addressing other issues in the case, the Court of Appeals modified the lower court’s order with respect to the IRA, but otherwise affirmed.

No. E2016-01295-COA-R3-CV (Tenn. Ct. App. May 24, 2017).

See original opinion for exact language.  Legal citations omitted.

To learn more, see Transmutation in Tennessee Property Division Divorce Law.