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Property Division in Tennessee Divorce

Throughout the United States, states generally utilize one of two different systems of marital property: (1) community property; or (2) equitable distribution. In states utilizing the community property system, the property of both spouses is categorized as either “separate property” or “community property,” and “community property” is divided either equally or equitably. In states utilizing the equitable distribution system, the property of both spouses is categorized as either “separate property” or “marital property,” and “marital property” is divided equitably. Although there are many similarities between the two systems, the vast majority of states -including Tennessee - utilize the equitable distribution system of marital property.

Generally, “marital property” is considered to be any property (whether real or personal) acquired during the marriage through the time, skill, or effort of a married person. On the other hand, “separate property” is generally property acquired before a marriage begins, after a marriage ends, or property a married person receives during marriage by gift, devise, or bequest. In Tennessee, a court will first categorize the property of both spouses as either “marital property” or “separate property.” After the property of the spouses is categorized, courts in Tennessee will proceed with equitably distributing the property categorized as “marital property” prior to formally divorcing the spouses.

What Property is Subject to Division During Tennessee Divorce?

As with many aspects of Tennessee divorce, the categorization and distribution of marital property is largely governed by statute. Tennessee Code Annotated § 36-4-121(b)(1)(A) specifically defines the term “marital property” to include “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.” In Tennessee, “marital property” also includes “income from, and any increase in the value during the marriage of, property determined to be separate property . . . if each party substantially contributed to its preservation and appreciation.” T.C.A. § 36-4-121(b)(1)(B)(i). Depending on the circumstances, “marital property” can also include the value of vested or unvested pension benefits or stock rights, as well as financial settlements arising from personal injury, workers’ compensation, or social security disability actions. Importantly, even intangible personal property – such as an ownership interest in a business – can also be considered “marital property” under Tennessee law and be subject to equitable distribution on divorce.

Conversely, Tennessee statutory law defines “separate property” to mean: (1) All real and personal property owned by a spouse before marriage, including, but not limited to, assets held in individual retirement accounts (IRAs); (2) property acquired in exchange for property acquired before the marriage; (3) income from an appreciation of property owned by a spouse before marriage except when characterized as marital property; (4) property acquired by a spouse at any time by gift, bequest, devise, or descent; (5) pain and suffering awards, victim of crime compensation awards, future medical expenses, and future lost wages; and (6) property acquired by a spouse after an order of legal separation where the court has made a final disposition of property. T.C.A. § 36-4-121(b)(2).

How Does a Court Determine the Distribution of Property During Tennessee Divorce?

The equitable distribution of marital property is often one of most vigorously litigated issues in a divorce. Under Tennessee law, the equitable division of marital property is based upon numerous factors. These factors include:

  • 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 a 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.
T.C.A. § 36-4-121(c).

Importantly, equitable distribution of marital property in Tennessee does not mean that each spouse will receive an equal share of marital property. Rather, equitable distribution is intended to result in a fair distribution of marital property between the parties, and such a distribution may or may not ultimately be an equal division. The decision of how to equitably divide marital property in Tennessee generally lies within the discretion of the trial judge and is based on the factors listed above as well as any other relevant factors considered by the court. Since the trial judge exercises a broad degree of discretion when distributing marital property in divorce, it is critical to secure the assistance of a knowledgeable attorney who can vigorously advocate on your behalf during your divorce proceedings.

What if my Spouse and I Agree on How to Divide Our Property?

When divorcing couples are able to agree on a division of their property, they can generally divide and apportion their property between them however they see fit by entering into a legal contract called a Marital Dissolution Agreement. The Marital Dissolution Agreement memorializes the property division agreement of the divorcing couple, forms a binding contract between the spouses, and is presented to the court for approval before the divorce is finalized. After both spouses sign a Marital Dissolution Agreement providing for the division of their property in divorce, it is enforceable like any other contract, and will generally only be set aside upon a strong showing of fraud, undue influence, mistake, duress, unconscionability, or other valid legal basis. When divorcing spouses cannot agree on a division of their property between themselves, litigation is required, and the court will equitably distribute the marital property of the parties based on the factors listed above and other relevant law.

What if I Have Signed a Prenuptial or Postnuptial Agreement?

When a married couple has already entered into a valid prenuptial or postnuptial agreement at the time one spouse files for divorce, Tennessee courts will generally enforce the prenuptial or postnuptial agreement and divide the property of the spouses in accordance with its terms. As a result, the division of property in Tennessee divorce can be governed by the terms of a valid postnuptial or prenuptial agreement rather than the rules set forth under Tennessee statutory law, even when the prenuptial agreement or postnuptial agreement was executed in a state other than Tennessee or is governed by the law of a state other than Tennessee.

How Does Property Division Work if my Spouse Dies?

When a marriage is ended upon the death of a spouse, the distribution of property is governed by the law of wills, intestate succession, estates, trusts, and probate. To learn more about the law of estate planning and probate, click here.

How can Cole Law Help Me With my Property Division in Divorce?

The distribution of marital property is often the most complicated and important aspect of a Tennessee divorce, and it is very important to secure the assistance of an experienced and knowledgeable Tennessee attorney when addressing the issue of property division. At Cole Law, our Nashville divorce attorneys understand the importance of fighting for your business, retirement accounts, and other important assets in divorce, and our experienced and knowledgeable attorneys focus on providing the close attention to detail, technical prowess, and vigorous advocacy necessary to protect your legal rights both inside and outside of the courtroom. Call us today at 615-490-6020 to schedule a consultation.

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