Estate Planning Newsletter – November 2016

SEPARATE PROPERTY OR MARITAL PROPERTY IN A DIVORCE

Because divorce is so prevalent in our society, and because I am asked so frequently by clients how to protect assets left to a child in the event the child gets divorced, I continue to scan cases where Tennessee Courts explain separate property vs. marital property.  Marital property is subject to being divided between spouses in a divorce.  Separate property maintains its nature as the separate property of a particular spouse.  In the case of St. John Parker v. Parker, the Court of Appeals pointed out several key factors that can be summarized in  bullet points for helping to provide a checklist of what constitutes separate property, what constitutes marital property, and how to determine the difference.  Some of those key factors are:

• The determination as to whether property is marital or separately is “inherently factual.”

• Tennessee Code Annotated §36-4-121(2)(b)(2) defines separate property as being all real or personal property owned by a spouse before marriage; property acquired in exchange for property acquired before the marriage; income from and appreciation of property owned by a spouse before marriage; property acquired by a spouse at any time by gift, bequest, devise, or dissent….

• Tennessee Code Annotated §36-4-121(2)(b)(2) defines marital property as all real and personal property acquired by either or both spouses during the course of the marriage.

• Assets acquired by either spouse during the marriage are presumed to be marital property; and a party asserting that assets acquired during the marriage are separate property has the burden of proving that such assets are separate property.

MY RECOMMENDATION:   When property is inherited, the legatee should be certain to maintain the separate nature of the property so that a court in a divorce case does not consider it transmuting into marital property.  Also, in estate planning, there are techniques a parent can use in leaving assets to a child that may preclude or lessen the risk of the property being considered marital property and then being divided as marital property in a divorce.

Yours very truly,

RAINEY, KIZER, REVIERE & BELL, P.L.C.

William C. Bell, Jr., Attorney at Law