In a divorce action in Tennessee, marital property is divided; separate property is not.
Property division is the term used by courts and lawyers for describing this process. Property division requires that all property be identified, classified, and valued. Tennessee is an “equitable distribution” state. This means that once property is classified as marital or separate, the trial court must divide marital property equitably according to the factors listed in T.C.A. § 36-4-121(c).
An equitable division does not always mean an equal division of property. In other words, marital property will not always be divided 50/50. Also, equitable division does not mean each party will receive a share of every piece of marital property.
Sometimes a court will give an entire asset to one spouse.
A trial court will classify all property as either marital or separate. Property acquired during the marriage is marital property. When classifying marital property, record title is not always determinative.
Separate property, also known as non-marital property, generally consists of all real and personal property owned before marriage, gifts, and inheritances.
As stated above, only marital property is divided. Each spouse will keep his or her separate property.
Under Tennessee law, the following factors are considered by the court in equitably dividing marital property:
1) The duration of the marriage;
2) The age, physical and mental health, vocational skills, employability, earning capacity, estate, financial liabilities and financial needs of each of the parties;
3) The tangible or intangible contribution by one (1) party to the education, training or increased earning power of the other party;
4) The relative ability of each party for future acquisitions of capital assets and income;
5) 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; (who contributed more, who performed marital role more, and why)
6) The value of the separate property of each party;
7) The estate of each party at the time of the marriage;
8) The economic circumstances of each party at the time the division of property is to become effective;
9) 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;
10) The amount of social security benefits available to each spouse; and
11) Such other factors as are necessary to consider the equities between the parties.
Tennessee law considers each spouse’s separate property in determining property division. If one spouse has substantially more separate property, the other spouse is likely to be awarded a greater division of marital property.
Under Tennessee law, it is possible for one spouse’s separate property, or the appreciation of that separate property, to become marital property. The income from and appreciation of separate property during the marriage may be classified as marital property if the non-owning spouse proves that both spouses substantially contributed to its preservation and appreciation.
Also, under Tennessee common law there are two ways that separate property becomes marital property.
The first way that separate property becomes marital is by commingling. Commingling occurs when separate property is “inextricably mingled” with marital property or with the separate property of the other spouse. If separate property is treated as marital property, a presumption arises that there has been a gift of the separate property to the marital estate.
Tennessee also recognizes transmutation as a method in which separate property becomes marital. According to the Tennessee Supreme Court transmutation occurs when “separate property is treated in such a way as to give evidence of an intention that it becomes marital.”
Transmutation, commingling, and the appreciation of separate property are complex property division issues that do not arise in every divorce. If relevant, your attorney will explain these concepts to you in detail.