What is the difference between separate and marital property?
If you are considering a divorce, you may wonder what property you will be entitled to if you divorce your spouse. During a marriage, oftentimes real property is acquired, pension and retirement accounts are created or increased and sometimes an inheritance is received. How and when you acquire property determines to a large extent if it is marital or separate property.
Under the laws of Tennessee, marital property is required to be equitably distributed. If you and your spouse can agree to a division of marital property, then the terms may be placed in a Marital Dissolution Agreement which specifies the division of marital assets and debts. If you and your spouse cannot agree, then a judge will hear evidence from both sides and order an equitable distribution of the marital assets and debts.
Under Tennessee statutes, marital property is property acquired by either or both spouses during the marriage up to the date of the final divorce hearing. Thus, property that is acquired during the marriage from income earned during the marriage is marital property, regardless of title. If you buy a car after you are married and it is titled in your name and paid from your income, the car is marital property. If you obtain a job after marriage and you contribute to a 401k account, the entire balance of your 401k account will be marital property subject to equitable distribution.
In regard to retirement or pension, any increase in value during the marriage is marital property, but you may be able to allocate a portion as premarital and treat it as separate property. If a retirement account was acquired prior to the marriage and no contributions were made during the marriage, then it is separate property.
Separate property is property owned by a spouse prior to marriage such as an individual retirement account, property acquired in exchange for property acquired prior to marriage and property acquired by gift or through inheritance. Even after marriage, if you inherit property and maintain it in a separate account or in your name, then it will generally not be considered marital property.
Determining what property is marital and separate can sometimes be tricky but if you can trace when and how the property is acquired, it will aid in determining how it is classified.
Held Law Firm attorney Melanie Hogg is experienced in property division, including dealing with high-asset divorces. Call 865-685-4780 to schedule a case assessment.