Tennessee is an Equitable Distribution Divorce State
Laws regarding property division upon divorce vary greatly from state to state. The following information is intended to provide you with a basic understanding of property division in a Tennessee divorce case.
Marital Property vs Non-Marital Property in Tennessee
Tennessee is an equitable distribution jurisdiction. That means we start with a presumption of a 50/50 split.
Marital property in Tennessee is anything acquired during the marriage with money earned during the marriage. It does not matter whose name the asset is titled in.
Non-marital property in Tennessee is property that is not included in the marital estate and is thus not subject to division by the court. Instead, whichever party owns the non-marital asset will keep that asset after the divorce.
The general rule in a Tennessee divorce is that the court considers and divides up the “marital” property of the spouses and that the non-marital property of each party remains with the spouse that owns that property.
In dividing up the marital property, the court is expected to be guided by principles of equity, making sure that the marital property division treats both spouses in a fair (but not necessarily in an exactly similar) manner. Although a property division might not necessarily be 50/50, the property division should be such that each party is treated fairly and exits the divorce with a similar amount of the marital estate
Marital property is divided by the court in a Tennessee divorce. Tennessee Code § 1-3-105 describes what constitutes marital property. It includes:
Assets acquired during the marriage. If a particular property or asset was purchased or acquired during the marriage, it is considered marital property. It does not matter if the property or asset was acquired by one or both spouses. For instance, if a husband purchases a classic car during his marriage to his wife, the classic car will be considered marital property, even if the husband purchased the property with money from his own paycheck and only his name appears on the title, the car is still likely to be treated as marital property. A common myth is that a spouse can protect an asset by keeping it in his or her name. That is not true in Tennessee.
Inter-spousal gifts during the marriage. When one spouse gives another spouse a gift, that gift would be treated as marital property. Suppose Tom gives Cindy a new car for their tenth wedding anniversary. Regardless of where Tom obtained the money for the gift and regardless of whose name appears on the title or who primarily drives the car, the car can be considered marital property and subject to division by the court.
Real and personal property held as Tenants by the Entireties. If the Parties hold property as Tenants by the Entireties, then that property is presumed to be a marital asset. Tenants by the Entireties is a special form of real estate ownership available only to married couples in Tennessee. In order to be held as tenants by the entireties:
The property must be subject to joint control and ownership;
Both Spouses must have an identical interest in the property;
The Parties must have been married at the time they acquired the property;
The Spouses’ interest must have been granted by the same instrument; and
The Spouses’ interest must have begun at the same time.
Tenants by the entireties offers certain protections and benefits for married couples; however, owning property in this manner will result in the court presuming the property so held is a marital asset. If one spouse wants the court to treat the property differently in a divorce, he or she has the burden of showing that the presumption is incorrect and that the property is in fact separate, non-marital property. He or she must do so by “clear and convincing evidence.”
Non-marital property is property that is not included in the marital estate and is thus not subject to division by the court. Instead, whichever party owns the non-marital asset will keep that asset after the divorce. Non-marital property includes:
Assets acquired prior to marriage. Those assets and property acquired by either of the spouses before they become married are to be treated as separate property not subject to division. Suppose Tom purchases a Cadillac as a gift to himself after getting his first new job. A few years later, he marries Cindy. Because Tom acquired the Cadillac before his marriage, it will likely be treated as separate property. What is more, if Tom later decides to trade in his Cadillac for a different car, that car can be considered a non-marital asset.
Property acquired by gift or inheritance from someone other than a spouse. Continuing with the example of Tom and Cindy, suppose that Tom’s brother gives him a Cadillac while Tom is married to Cindy. Or suppose that the Cadillac belonged to Tom’s grandfather, who then gifts the Cadillac to Tom as part of the grandfather’s will. In these situations, the court is likely to treat the property as Tom’s separate property.
Income derived from nonmarital assets. This situation typically arises when one spouse owns rental property prior to the marriage. So long as the spouse that owns the rental property keeps the proceeds separate from marital property or joint accounts, the income produced will be considered non-marital property.
Assets and property excluded by agreement. Through a valid prenuptial or postnuptial agreement, the Parties can exclude assets and property from division, even if the property would otherwise be considered marital property. For example, if Tom and Cindy enter into a postnuptial agreement. They agree, amongst other things, that Tom’s car will be treated as his own separate property and Cindy’s car will be treated as her own separate property. Assuming that they complied with the requirements for a legally enforceable agreement, the court will honor their agreement and exclude those items from the marital estate.
Assets and property are not the only things that get divided during a divorce; the liabilities and the debts of the Spouses get divided as well. Similar to assets and property, liabilities are classified as either non-marital or as marital liabilities, depending on who incurred the debt and when it was incurred. If a debt is found to be non-marital, then the spouse who incurred the debt will be singularly responsible for the full debt following the divorce. If, on the other hand, the liability is found to be marital, the court may order that both parties continue paying the debt jointly or that some marital assets be sold in order to satisfy the debt. For instance, Tom’s student loans incurred before marriage will likely continue to be his separate debt, whereas credit cards used for purchases during the marriage will likely be considered a marital liability.
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