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  • Writer's pictureRobert Jackson

Divorce: How Property is Divided and What You Need to Know

Updated: Jun 26

In a Tennessee divorce, property division involves classifying property as either marital or separate, valuing them, and distributing them equitably based on statutory factors for an outcome tailored to each case.

Division of property in a Tennessee divorce can be a challenge. Having a general understanding of how your property will be divided is important for anyone contemplating or going through a divorce.

A home divided in a divorce.

Definition of Marital Property vs. Separate Property

In Tennessee, property (which includes both assets and liabilities) is classified into two categories: marital property and separate property.

  • Marital Property: This includes all real and personal property acquired by either or both spouses during the marriage up to the date of the final divorce hearing. It encompasses assets owned by either or both spouses as of the date of filing for divorce, as well as any property rights acquired during the marriage.

  • Separate Property: These are assets acquired before the marriage or through inheritance or gifts specifically given to one spouse. Examples include properties owned prior to marriage, personal inheritances, and gifts received by one spouse alone.

Remember, just because spouses are separated and/or are going through the divorce process does not mean that they are no longer acquiring marital property. Properly identifying and categorizing assets is critical because only marital property is subject to division during a divorce.

Equitable Distribution of Property

Explanation of Equitable Distribution

Tennessee follows the principle of equitable distribution, which means that marital property is divided in a manner deemed fair and just by the courts, but not necessarily equally or “50/50.” In determining what is “equitable,” courts will consider a variety of statutory factors (explained below) based on the unique circumstances and specifics of each marriage. Though this approach provides flexibility for the courts in distributing property between parties, it also means that there is a wide range in what might be considered “equitable” at the end of each divorce.  

The Process of Property Division

Steps Involved in Property Division

In Tennessee, the courts follow a three-step process for property division:

  1. Identify and Classify Property: The court identifies all assets and liabilities belonging to the parties and classifies them as either marital or separate property.

  2. Value the Property: The court determines the value of the marital property (and, when appropriate, the separate property).

  3. Divide the Marital Property: The court divides or apportions the marital property using the factors outlined in Tenn. Code Ann. § 36-4-121(c).

In the final step, courts apply the factors in Tenn. Code Ann. § 36-4-121(c). The application of these factors is not mechanical; the trial court must weigh the relevant factors in light of the evidence presented at trial.

Role of Attorneys and Financial Experts in the Property Distribution Process

Speak with an attorney before you begin the divorce process. Attorneys play a vital role in the entire divorce process, including advising their client on the potential outcomes of an equitable division of marital property in a divorce and advocating for their interests in the proceeding. Depending on the circumstances of the case, your attorney may decide that a financial expert, such as a forensic accountant or real estate appraiser, is needed to help value certain property, especially in cases that involve complex or substantial assets. For more information on the role of attorneys in a divorce, click here.

Agreements vs. Going to Court for Trial

Divorcing couples can reach a property division agreement through negotiation or mediation, or they can go to court for a trial. Reaching an agreement is often less adversarial and can save time and money. However, if an agreement cannot be reached, the court will make the final decision based upon the evidence presented and trial and statutory factors described below.

Factors Affecting How Property is Divided in a Divorce

As outlined in Tenn. Code Ann. § 36-4-121(c), in making equitable division of marital property, a court shall consider all relevant factors, including:

  1. The duration of the marriage;

  2. The age, physical and mental health, vocational skills, employability, earning capacity, estate, financial liabilities, and financial needs of each of the parties;

  3. The tangible or intangible contribution by one party to the education, training, or increased earning power of the other party;

  4. The relative ability of each party for future acquisitions of capital assets and income;

  5. 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 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 (dissipation of assets means wasteful expenditures which reduce the marital property available for equitable distributions and which are made for a purpose contrary to the marriage either before or after a complaint for divorce or legal separation has been filed);

  6. The value of the separate property of each party;

  7. The estate of each party at the time of the marriage;

  8. The economic circumstances of each party at the time the division of property is to become effective;

  9. 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;

  10. In determining the value of an interest in a closely held business or similar asset, all relevant evidence, including valuation methods typically used with regard to such assets without regard to whether the sale of the asset is reasonably foreseeable;

  11. The amount of social security benefits available to each spouse;

  12. Such other factors as are necessary to consider the equities between the parties; and

  13. The total amount of attorney fees and expenses paid by each party in connection with the proceedings; whether the attorney fees and expenses were paid from marital property, separate property, or funds borrowed by a party; and the reasonableness and necessity of the attorney fees and expenses paid by each party.

Special Considerations

Certain assets require special consideration during property division:

  • Division of the Family Home: Deciding whether to sell the home and divide the proceeds or allow one spouse to keep it. This issue can be further complicated if the parties have minor children.

  • Retirement Accounts and Pensions: These may require a Qualified Domestic Relations Order (QDRO) to divide.

  • Business Ownership and Interests: Valuing and dividing business interests can be complex and may require professional valuation.

  • Handling Debts and Liabilities: Debts incurred during the marriage are typically divided between the spouses.

  • Inheritance and Gifts Received During the Marriage: These are generally considered separate property unless commingled with marital assets. If this happens, the asset may be considered to have “transmuted” from separate property to marital property.

Common Challenges and Disputes

Property division can be contentious, and common challenges include:

  • Disagreements Over Asset Valuation: Differing opinions on the value of assets can lead to disputes, including a “battle of the experts” when each party hires their own experts to value a property.

  • Hidden Assets or Undisclosed Property: One spouse may attempt to hide assets, requiring forensic accounting to uncover.

  • Emotional Attachment to Certain Assets: Emotional ties to the family home or sentimental items can complicate negotiations.

  • Legal Complexities in High-Net-Worth Divorces: High end divorces involving significant assets or business interests can be more legally complex.

Tips for to aid in the Divorce Property Division Process

  • Keep Thorough, Organized, and Accurate Records: Document all assets, liabilities, and financial transactions.

  • Be Honest and Transparent About All Assets: Even the appearance dishonesty or intentional obfuscation can ruin your credibility in the eyes of the court, or worse.

  • Attend Mediation in Good Faith: Mediation is typically required in a divorce case in Tennessee before the case goes to trial, and offers a chance for the parties to reduce conflict and facilitate a mutually agreeable settlement.

  • Seek the Advice of an Attorney: Engage an experienced attorney to guide you through the entire divorce process, ideally before the process begins.

If you are facing a divorce in Tennessee and need legal guidance on property division, contact Attorney Lee Jackson for a consultation:

(615) 376-9933

Visit our website for additional resources and guides on divorce and family law.

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