Whether you’ve been married a few years, a few decades, or some time in between, you have assets and debt that must be divided when you get divorced.
Tennessee law requires that your marital assets and debts be equitably distributed. Of course, what you consider equitable and what your soon to be ex-spouse considers equitable may differ. The only definition that matters, however, is the one used by the state of Tennessee.
Identifying Marital Assets and Debts
Equitable distribution only applies to marital property and debts, including:
- Those acquired during marriage
- The increase in value or income from separate property brought to the marriage
- Some personal injury recoveries, workers’ compensation benefits, Social Security disability benefits, and other similar benefits
Separate property is not subject to equitable distribution and includes but may not be limited to:
- Property owned before marriage
- Property acquired during marriage that was paid for by property owned before marriage
- Gifts, bequests, or inheritances given to one spouse
- Legal recoveries for pain and suffering, victim of crime compensation awards, future medical costs, and future lost income
- Property or debt acquired by a spouse after an order of legal separation if the court made a final disposition of property in the legal separation order
Typically, separate property is kept by the spouse who owns it.
Equitable Distribution in Tennessee
Equitable does not mean equal. Instead, equitable means fair. The court will consider the following factors when making an equitable, or fair, distribution of marital assets:
- How long you were married
- Specific information about each spouse including age, physical health, mental health, job skills, employability, earning capacity, debts, and financial needs
- The contributions, monetary and otherwise, of one spouse to the education, training, or increased earning power of the other spouse—for example, if one spouse spent more time at home taking care of the children and house so the other spouse could further their career, that may be taken into consideration by the court when distributing property and debt
- Each spouse’s contribution to the acquisition, preservation, appreciation, depreciation, or wasteful spending or use of marital and separate property
- The value of each spouse’s separate property
- The value of each spouse’s estate at the time of your marriage
- Each spouse’s current economic circumstances
- The tax consequences, costs of selling property, and other reasonably foreseeable expenses associated with a particular asset
- All relevant evidence about the value of an interest in a closely held business or similar asset
- Each spouse’s Social Security benefits
- All other factors the court decides are necessary to divide your marital assets and debts equitably
Marital debts will also be divided after the court considers:
- Why the debt was incurred
- Which spouse incurred the debt
- Which spouse benefited from the debt
- Which spouse is in the best financial position to repay the debt
Based on these factors, the court may decide that an equitable split is something other than an even 50/50 division of marital assets and debts.
Special Consideration for the Family Home
If marital property was used to purchase, improve, or maintain the family home, the home will usually be considered marital property. For many people, their home is one of their most significant financial assets. Additionally, both spouses may have an emotional interest in staying in their home. The home is part of the marital property and will be included in the equitable distribution of marital property. However, the court may give special consideration to allowing the spouse who has primary physical custody of the children to remain in the home.
Protect Your Financial Future After a Tennessee Divorce
If you’re divorcing, you only have one chance to divide your assets and debts, and the decisions you make now may impact your financial future. Make sure your rights are protected by contacting the Luna Law Firm today. Attorney Nathan Luna will thoroughly review all of your assets and debts and help resolve your divorce case in accordance with your goals and priorities. Contact us today to get started.