When you’re headed toward divorce, you want to know what your life might look like after the divorce process is all done and settled. A big part of that picture is your property division.
Like most states, Tennessee follows the principle of equitable distribution. This means that divorcing couples don’t automatically split their assets fifty-fifty. Instead, the courts aim for a fair distribution of your marital estate. But what does that mean?
Defining the martial estate
For starters, equitable distribution demands that you distinguish marital assets from separate assets. Only your marital assets are subject to division. According to the law, these include:
- All real and personal property acquired during the marriage
- Financial awards for lost wages, medical bills and property damage
- Any increase in a pension plan, retirement account, vested or unvested stock during the marriage
- The amount that the value of separate property may have increased during the marriage if both parties contributed toward its increase
This last point is particularly important to business owners and others who may bring significant assets to the marriage. They may feel their businesses are separate property, especially if they never ask their spouses to work for the businesses. But the law may allow spouses to “invade” such property if they contribute even just indirectly by:
- Taking on the role of homemaker
- Handling the family finances
- Earning wages from the business
The result is that it’s not always easy to recognize what belongs to the marital estate. The assets you thought were separate may become intertwined with the marital estate. Divorcing couples often disagree about whether assets should be counted as separate or as marital.
You need to see the marital estate to divide it fairly
Equitable property division depends on a fair and clear definition of the marital estate. This is one of the reasons that business owners and other people with substantial assets often get prenuptial agreements. It’s not that they’re aiming for divorce. It’s that they understand how divorce can threaten more than the financial benefits of a business; the business, itself, could risk division.
That said, defining the marital estate is just the first step toward equitable property division. Fair settlements need to account for a host of other factors, as well, and we’ll look at some of those in a later post.