Property Division During Divorce

My clients are often very concerned about the property division in a divorce.  Everybody has heard stories about someone getting “cleaned out” and being left with nothing while their spouse lives in the lap of luxury.  Does this really happen?  Is it fair?  What can you do to stop it?  Let’s look at the way Tennessee courts step through the division of property.

The Long and Short Marriage

If your marriage has been relatively short, the court will likely try to return the parties back to the position they were in before the marriage started.   For example, suppose a woman with a great deal of income and property marries a man who owns very little and the marriage only lasts a year or two.  The court will likely divide the property so that the man leaves the marriage with very little and the woman will retain her wealth.

On the other hand, in marriages of longer duration the court will begin with a presumption that all of the marital property should be divided equally.  The theory is that each of the parties contribute to the acquisition of property and are equal co-owners of all marital property.

However, these are starting points for the court, and the division of property can be greatly altered when the court examines the factors listed below.

What is “Marital Property”?

One of the very first steps you should take is to list all of the property you and your spouse acquired during the marriage.  This includes land, houses, time shares, businesses, stock, mutual funds, retirement accounts, insurance with cash value, vehicles, bank accounts, checking accounts, investments, collections, household furnishings, and anything else you may own that has value.

This includes any property that was fraudulently conveyed in anticipation of the divorce.  In plain english, this means that if one spouse thinks he can “hide” some of the property by giving it away to his friends just before the divorce, he is wrong.  The court can “give” the value of this transferred property back to him during the property division.

What is “Separate Property”?

Any property you owned before the marriage is your separate property, and anything you received in trade for that property is also separate.  What this means is that if you sell property that you brought into the marriage, the money from the sale is yours.

Also separate is any property given to you either as a gift or through a will.  Furthermore, an IRA that you owned before the marriage remains your separate property.

Finally, if you have received an award by a court for pain and suffering, future medical expense, or future lost wages, that is also considered your separate property.

Value of Property

It is up to the parties to prove the value of the property.  The judge will likely be dividing property he has never seen, so he will rely on you to show what each piece is worth.  For valuable items, it may be worth paying an expert to assign a reasonable market value.  This can be very important if the property consists of businesses, collections, rental property, antiques, or stock in closely-held corporations.

The Division of Property

Earlier I wrote that the court will begin with certain “starting points” based on the length of the marriage.  The court can move away from those starting points based on several factors listed by statute, including:

• The age, health, education, earning capacity, and financial needs of the parties;
• The contribution one party made to the education or training of the other party;
• The ability of each party to acquire property and income in the future;
• The contribution of each party to the growth or loss of the marital property;
• The value of each parties separate property;
• The economic circumstances of each party at the time of the division;
• The tax consequences and cost of maintenance or sale of the property;
• The social security benefits available to each spouse; and
• Any other factors the court should consider to make the division equitable.

The last one on that list is important, as it clearly states the court can consider other criteria when considering the division of property.  Other things the courts have considered include:

• Agreements or contracts between the parties;
• Gifts from one party to the other;
• How much an asset has gained in value;
• Whether an asset is inherited or has important ancestral history;
• Ability of each party to manage income producing property; and
• Ease of converting property into cash.

This is only a partial list, and the courts have found many other factors to consider when splitting up marital property.  However, I must repeat that there is a strong presumption that marital property should be divided equally, so if you are going to make the argument that you’re entitled to more than half, you should be prepared to show that many of the factors above weigh in your favor.

It Is So Ordered

Finally, the property division will become an order of the court.  The court can order that each party complete whatever paperwork is required to affect the transfer of the property from one person to another.  If your ex-spouse refuses to cooperate, the court can find him in contempt of court and possibly let him sit in jail until he is willing to abide by the court’s order.

This is a very short summary on the law of this area.  I left out a lot of details and there are exceptions to nearly every rule.  If your divorce involves significant property, I can’t overstate the importance of working with a lawyer to help you protect your assets.