Dividing Marital Assets & Liabilities in a Divorce
Statute governing the division of marital assets and liabilities:
The statute governing the division of marital assets and debts in a divorce is Tenn. Code Ann. § 36-4-121, which states, in part, that “In all actions for divorce or legal separation, prior to any determination as to whether it is appropriate to order the support and maintenance of one party by the other, the court shall equitably divide, distribute, or assign the marital property between the parties without regard to marital fault in proportions as the court deems … and allocate responsibility for paying the marital debt in proportions as the court deems just … ."
Before a divorce can be finalized, all assets possessed by the divorcing parties must be classified as either separate or marital, then equitably divided between the parties. An equitable division of marital property does not require that each party receive a share of every item classified as marital property, nor does the property have to be divided equally. The parties to a divorce can reach an agreement as to the division of property or it will be done by the court at trial.
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Separate Property in a Divorce:
Any property that is deemed to be a party’s separate property will not be subject to division by the court during a divorce (though it is still relevant for other considerations, like an award of alimony). TCA § 36-4-121 also defines separate property to include “all real and personal property owned by a spouse before marriage” as well as “income from and appreciation of property owned by a spouse before marriage.”
However, if each party substantially contributes to the preservation and appreciation of a piece of property that would normally be considered the separate property of one spouse or the other, then the income and appreciation in value of said property is treated as marital property. Tenn. Code Ann. § 36-4-121(b)(2)(A), (C); (b)(1)(B)(i). Thus, an increase in the value of separate property that occurs during the marriage may be deemed marital property “if each party substantially contributed to its preservation and appreciation.” Tenn. Code Ann. § 36-4-121(b)(1)(B)(i). It is the function of the court adjudicating a divorce to classify property as separate versus marital and to hear and assess evidence of the substantial contributions of a spouse to the preservation and appreciation of an asset that is the other spouse’s separate property. § 36-4-121(a)(1).
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Equitable Division of Marital Property:
In making equitable division of marital property, the court shall consider all relevant factors as stated in to Tenn. Code Ann. § 36-4-121(c). An amendment to the statute in March of 2022 added for the court’s consideration the total amount of attorney fees and expenses paid by each party and where payment of those fees came from (factor 13). As stated above, “equitable” does not necessarily mean “equal,” and the Tennessee Court of Appeals has affirmed trial court rulings with discrepancies of as much as 22% between the property awarded to each spouse.
Internal Citations Omitted.
References:
T.C.A. § 36-4-121
Burnett v. Burnett, No. E2021-00900-COA-R3-CV
Morton v. Morton, 182 S.W.3d 821
(Robertson v. Robertson, 76 S.W.3d 337, 341 (Tenn. 2002)).
Last Updated 1/21/23.