When a couple divorces in Tennessee, the court will divide the marital property based on equitable distribution. Equitable division does not have to be equal, but the court must start by presuming that all the marital property will be split equally between the spouses. From there, a set of factors will be considered to shift the balance of ownership from one spouse to the other. Ultimately, the result must be a fair division that reflects the past efforts and future needs of both spouses.
Only Marital Property will be Divided
In a divorce, the distribution of property depends on which property belongs to the marriage – marital property – and which property belongs to each of the two spouses – separate property. Tennessee law defines marital property as property acquired or income earned during the marriage and up to the date of the final divorce hearing (in other words, post-separation earnings can be included). It includes tangible assets like real and personal property and intangibles such as income, pensions, stock-option rights, and retirement. Additionally, any award to cover lost wages, medical bills, or damage to marital property as a result of a personal injury, workers’ compensation claim, or social security disability is also marital property.
Separate property is property that belonged only to one spouse before marriage. It could include property acquired during marriage, but only under certain circumstances. For example, a new condo acquired by the wife in exchange for the townhouse she owned before marriage can remain her separate property. However, if both the wife and husband put substantial effort into maintaining or improving this separate property – like remodeling the condo’s kitchen – then any income or increase in value of that property becomes marital property. Other examples of separate property acquired during marriage are gifts or inheritances given to just one spouse, or recovery in a personal injury action for pain and suffering.
Only the marital property must be divided between the spouses when the marriage ends. Separate property remains in the hands of the spouse who owned it before or during the marriage. It is not considered part of the division of property between spouses.
Factors for Division of Property
Because spouses may continue acquiring property up until the final divorce hearing, the court will value the marital property at a time as close as possible to that hearing date. Once the court accepts the values for all the marital property, it starts with a presumption of equal division, but may shift from that to potentially unequal but equitable distribution based on a variety of factors. These include the spouses’ monetary and non-monetary contributions to the acquisition of assets. Monetary contributions to the marriage include property, any change in the value of that property, and wages. Non-monetary contributions include homemaking, parenting, and other unpaid work. The court will also consider the length of the marriage, the ages and health of the spouses, their respective occupations or employable skills, and their financial resources, liabilities, and needs. If one spouse contributed to the education, training, or increased earnings of the other spouse, those efforts will not be ignored.
Additional factors are tax consequences, whether the spouse with custody of the children should receive the family home or at least the right to live in it, and whether a spouse wasted a marital asset. Although the court can increase a spouse’s share of the division if the other spouse did something to depreciate the value of the marital property, it cannot decrease a spouse’s property interest for causing the marriage to fail.
Throughout the process, divorcing spouses will have opportunities to agree between themselves on what is a fair division. Once they settle their property dispute, they can submit it to the court in the form of a marital settlement agreement (MSA). In most cases, a court will accept the parties' MSA without further involvement. On the other hand, if the spouses cannot work together, or if there are certain items of property that they cannot agree on, then the court will decide for them.
Alimony Compliments Equitable Division
Alimony is a payment from one spouse to the other to help the recipient spouse maintain a lifestyle as close as possible to the marital standard of living. In Tennessee, a court has wide discretion on when and how much alimony should be awarded based on many of the same factors used to divide the marital property. In evaluating these payments, however, the court will also consider fault in the deterioration of the marriage.
An award of alimony may impact the court’s analysis of the division of property and it may reach a spouse’s separate property. The court could order a spouse to pay alimony even before it completes the division of marital property. It may also require a spouse to pay a lump sum payment – alimony in solido – as a way to off-set an imbalance in property rights.