Going through a divorce is challenging, and one of the most important issues in a divorce is how the court divides property. If you're facing a divorce in Tennessee, it's crucial to understand how Tennessee courts the division of assets. Unlike some "community property" states that generally require a 50/50 split in all cases, Tennessee follows an "equitable distribution" model for property division. This means the divorce court will divide marital property fairly or equitably, which does not necessarily mean equally.

Here's a breakdown of how property is divided in a Tennessee divorce:

1. Marital Property vs. Separate Property: The Crucial Distinction

At the time a divorce occurs, all property owned by the parties is going to be classified as either “marital property” or “separate property.” Marital property is going to be “equitably” divided by the court. Separate property will be granted to the party who owns the separate property. Each type of property is addressed below:

Marital Property

Marital property generally includes everything acquired by either spouse during the marriage, up to the date of the final divorce hearing. This can include income earned by either spouse, real estate purchased during the marriage, retirement accounts, pensions, and stock options accrued during the marriage, bank accounts and investments, vehicles, furniture, and other personal property acquired after the date of the wedding.

Remember, just because an asset is marital property, does not necessarily mean it is equally divided, although it certainly may be so divided. The court has the authority to determine what division is fair or equitable.

Separate Property

Separate property includes assets owned by one spouse before the marriage or any item a spouse is gifted or inherited during the marriage. Separate property is awarded to the party who owned the property before the marriage or who inherited or was gifted the property during the marriage.

There are certain situations where property that would normally be deemed to be separate property are treated as marital property. First, if a party “comingles” separate property with marital property, the court is likely to treat the property as marital. An example of this is if a person has a bank account that he or she had prior to the marriage, and during the marriage the spouse adds marital funds to the account.

Second, if the spouse “gifts” the separate property to the marriage (called transmutation) the property would be deemed to be marital. An example of this would be a spouse owns a house prior to the marriage and during the marriage, the spouse adds the other party’s name to the deed of the property. That property is now marital.

The third way separate property may be subject to division is if either party has separate property and the other spouse “substantially contributes to the preservation and appreciation of the property,” the increase in value may be divided as marital property. As an example, if one party owns a house prior to the marriage and he or she does not add the other spouse to the deed, it would be separate property during a divorce. However, if, during the marriage, the other spouse pays to have a new roof put on the house, or pays for the house to be renovated, the increase in value due to the non-owner’s contribution may be divided by the court. The underlying asset would still be separate property, but the increase in value can be treated as marital and divided by the court.

2. Valuing the Property

Once the court determines property is marital, it will generally be valued by the court. Often parties can agree on values. If they cannot, depending on the type of property, experts may have to be retained by a party to give the court an opinion on value.

3. Equitable Distribution: What "Fair" Means in Tennessee

After identifying and valuing all marital property, the court will then divide it "equitably." This does not automatically mean a 50/50 split. Instead, a Tennessee court will consider various factors to determine a fair outcome, including the length of the marriage, the financial situation of each party, including whether either party is likely to acquire future property, and the value of each party’s separate property, among other factors.

4. How Debts are Divided

Marital debt (debt acquired during the marriage) is also going to be equitably divided. In determining what is equitable, the court will consider various factors including the purpose of the debt, which party incurred the debt, which party benefited from incurring the debt, and which party has the income to repay the debt.

Seeking Legal Guidance

Property division in a Tennessee divorce can be complex, with many nuances and potential pitfalls. To protect your rights and ensure a fair outcome, you need an experienced divorce attorney. The family law attorneys at Patton | Pittman have over 60 years of combined experience in Tennessee divorce law.