Tennessee law requires courts to equitably divide marital property in a divorce, but "equitable" doesn't mean "equal." Assets and debts are first sorted into marital and separate property, and separate property can transmute into marital property depending on how the parties treated it during the marriage. Once property is classified as marital, courts weigh a detailed list of statutory factors — from the length of the marriage to each spouse's earning capacity and contributions — to reach a fair division.
Under Tennessee law, a trial court must equitably divide, distribute, or assign marital property in every divorce or legal separation action. Tenn. Code Ann. § 36-4-121. Equitable division starts with classifying property, then applying a set of statutory factors to decide how the marital portion should be split.
Marital Property or Separate Property
Every asset and debt is placed into one of two categories: marital property or separate property. Separate property is not divided in the divorce — it is awarded directly to the spouse to whom it belongs. Common examples include an inheritance or an asset acquired before the marriage that the owning spouse did nothing during the marriage to improve or maintain, such as an investment account left untouched.
Separate property can lose that status through transmutation — a fact-specific doctrine under which a spouse’s separate property is legally converted into marital property because the spouse’s conduct shows an intent to treat the asset as part of the marital estate.
Marital Property Division Factors
Once an asset is classified as marital, the court applies the statutory factors in Tenn. Code Ann. § 36-4-121(c) to reach an equitable division:
- Duration of the marriage: The length of time the parties were married.
- Personal and financial characteristics of each party: Age, physical and mental health, vocational skills, employability, earning capacity, estate, financial liabilities, and financial needs.
- Contributions to earning power: Tangible or intangible contributions by one party to the other’s education, training, or increased earning power.
- Future acquisitions: Each party’s relative ability to acquire future capital assets and income.
- Contributions to property and the family: Each party’s contribution to the acquisition, preservation, appreciation, depreciation, or dissipation of marital or separate property, including contributions as a homemaker, wage earner, or parent — homemaker and wage-earner contributions are given equal weight when each party fulfilled their respective role. Dissipation refers specifically to wasteful expenditures that reduce the marital property available for division, made for a purpose contrary to the marriage, before or after a divorce complaint is filed.
- Value of separate property: The value of each party’s separate property.
- Estate at marriage: Each party’s estate at the time of the marriage.
- Current economic circumstances: Each party’s economic circumstances at the time the property division becomes effective.
- Tax and sale expenses: Tax consequences to each party, costs associated with a reasonably foreseeable sale of an asset, and other reasonably foreseeable expenses tied to the asset.
- Closely held business valuation: When valuing an interest in a closely held business or similar asset, all relevant evidence must be considered, including valuation methods typically used for such assets regardless of whether a sale is reasonably foreseeable. Depending on the asset, this may include a lack-of-marketability discount, a lack-of-control discount, and a control premium, if the evidence supports it.
- Social Security benefits: The amount of Social Security benefits available to each spouse.
- Attorney’s fees and expenses: The total attorney’s fees and expenses each party paid in connection with the proceedings, whether they were paid from marital, separate, or borrowed funds, and whether the fees were reasonable and necessary under Rule 1.5 of the Tennessee Rules of Professional Conduct.
- Other factors: Any other factors necessary to consider the equities between the parties.
Not Every Factor Applies Equally
These statutory factors don’t carry the same weight in every case — courts are expected to focus on whichever factors are most relevant to the facts in front of them. In marriages of relatively short duration, for example, a court may try to place the parties in roughly the same position they would have been in had the marriage never occurred.
At Henry & McCord, each divorce is unique and requires a thorough understanding of the law to reach an equitable result, whether by agreement or at trial. We use our knowledge of these factors, and our experience applying them, to guide you through each step of the divorce process with realistic and strategic planning.
Contact us today to schedule your consultation.
This memo is a general summary and does not constitute legal advice for any specific divorce or property division. Please contact us to discuss your specific situation.