Does Everything We Own Get Divided in a Tennessee Divorce?

No. Some property may not be subject to division, if it is “separately owned.” 

Under Tenn. Code Ann. 36-4-121(b)(2) separate property is generally set aside and excluded from being divided in a divorce. Only marital property is subject to division.

Separately owned property may include assets such as: an inheritance, or a gift specifically to one spouse, or a personal injury award,  even if received during the marriage.

It may also include an IRA (converted from a 401k) and/or retirement plan from employment prior to the marriage. Likewise it can include interests in a separate business owned by one spouse prior to the marriage, one that the other spouse does not participate in directly.

In practice, however, the law often is not “black and white” as to whether an asset is marital or separate. There are many distinctions made based in notions of fairness.

Many times what started out as separate property ends up as marital property in nature.

This happens, for instance, when the spouse who did not own the property before the marriage, contributes significantly to the preservation and/or appreciation of the asset during the marriage.

For example, one spouse worked part time on the family farm that the other spouse inherited. Or, both parties contributed to the repairs and taxes of an inherited vacation home. 

Or, an off-site business owned by one spouse before the marriage was made more successful because the “stay-at-home” spouse managed all of the family finances, or took care of the children, or entertained the other spouse’s business clients for many years.

Also, consider a pre-marital IRA worth $100,000 on the wedding date which appreciates to $200,000 during a long marriage. Through there was no direct effort of that spouse in causing the appreciation, it may also be subject to division due to the long marriage.

Finally, it is worth noting that how one asset is divided (or not) could affect whether another asset will have to be divided.  For example, if the family home or business is not going to be sold and divided, then some other asset may have to be sold and divided to accomplish a fair settlement.

These situations illustrate there are many factors that need to be considered before the property divisions in divorce are determined.

Leaving these kinds of decisions up to the court, as in traditional litigated divorce, makes it hard to predict how a judge will rule, since each case is unique and judges have wide discretion to determine what is fair in these matters.

When an out-of-court settlement is reached by means of thoughtful negotiations with advice of a neutral financial expert (such as in the Collaborative Divorce process) it is highly likely to find the division of property that works best for both parties.