Tennessee case summary on marital or separate property in divorce.
The husband and wife in this Knox County, Tennessee, case were married in 2000 and had two children. The husband was an anesthesiologist, and the wife was mostly a stay-at-home mom during the marriage.
The husband had purchased the marital residence in 1989, and he also brought to the marriage a cabin property in North Carolina, as well as other properties.
The husband also had a 401(k) that predated the marriage.
During the marriage, there had been extensive improvements to the properties, paid for from the husband’s salary, which was deposited into the couple’s bank account.
The wife filed for divorce in 2008, and reinstated the proceedings in 2010 after a period of living together again.
The trial finally took place in 2017 over several days. A key issue was the classification of the properties. The trial court held that the marital residence and the North Carolina cabin were the husband’s separate property, and that no transmutation took place during the marriage. The trial court did, however, award the wife half the cost of renovations done during the marriage. The husband’s 401(k) was classified as marital property and divided.
After post-trial motions involving child support, both parties appealed to the Tennessee Court of Appeals. The husband argued that the 401(k) was his separate property. The wife, on the other hand, argued that the real properties were marital property.
The appeals court noted that property held by a spouse before marriage was separate property, but that this does not end the inquiry. If the spouses treat the property as joint property during the marriage, then it may become joint property through transmutation.
In this case, one key factor was that the parties used one of the properties as a marital residence, and that there was ongoing maintenance and management by both parties.
For the marital residence, the Court of Appeals quickly concluded that the lower court had erred. It focused on the fact that the parties had used the property as their family home, and paid the mortgage and maintenance with marital funds. The appeals court did concede that the property was titled in the husband’s name, but held that the other factors outweighed this one.
Similarly, the appeals court held that the North Carolina cabin had transmuted. The court noted that the couple frequented the cabin, and even though it was not their primary residence, it was intended as a family vacation home, and had been renovated to accommodate the parties’ children. Also, marital funds were used to upgrade the property during the marriage. For these reasons, the court held that the property had transmuted.
The court also examined another piece of property and held that it was marital. While the husband held an interest prior to the marriage, it was not acquired in full until the parties were married, and marital funds were used.
The trial court had held that the husband’s 401(k) was marital property, but on this point, the Court of Appeals reversed. After examining the evidence, it held that there was a large premarital component that the lower court had not properly accounted for. For this reason, it reversed.
After addressing other issues in the case, the Court of Appeals reversed in part and remanded the case for further proceedings.
No. E2019-01891-COA-R3-CV (Tenn. Ct. App. Dec. 8, 2020).
See original opinion for exact language. Legal citations omitted.
To learn more, see Property Division in Tennessee Divorce.
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