Are Gifts Subject to Division in a Tennessee Divorce?

Navigating a divorce can be tricky, especially concerning the division of property. You may be going through your assets and wondering if gifts or inherited assets are subject to division during your divorce. It is a complicated process. Sometimes gifts are subject to division, and sometimes they are not. Typically, in Tennessee, gifts given to one spouse are usually separate property, but may become marital property under certain circumstances.  If you are going through a divorce and have questions regarding asset distribution, contact a Memphis, Tennessee property division lawyer for assistance.

How Tennessee Courts Classify Property in a Divorce

During a divorce, property owned by you and your spouse can be divided. However, before assets can be divided, they must be properly classified as either marital or separate property. It’s critical to understand that classification is up to the discretion of the court in accordance with the law, but these distinctions are not automatic. 

Marital vs. Separate Property

Under Tennessee law, only marital property is subject to division during a divorce. This is property acquired by one or both spouses during the marriage. If you have been married for a number of years, it is likely that as a couple, you have accumulated a significant amount of shared assets and property. 

Property that one spouse owned before the marriage is typically considered to be separate property. However, individual property can become marital property over the course of the marriage. For example, if one spouse owned a house before the marriage, it would be considered separate property. However, if the other spouse contributed to the property financially or through maintenance and upkeep, a court may deem it joint property.

Examples of marital assets can include:

• Real estate acquired during the marriage
• Joint bank accounts
• Retirement accounts, pensions, and 401k
• Stocks and bonds

Common examples of separate property include:

• Property owned before marriage and kept separate
• Gifts given to one spouse
• Inheritances received by one spouse

Is Tennessee an Equitable Distribution State?

Tennessee, under TN Code § 36-4-121, is what is known as an equitable distribution state, which means that a court will determine the division of marital assets by what is fair and equitable, which, in many instances, means that assets will not be split down the middle. This differs from a community property state, where each spouse gets 50% of the value of the assets.

Are Gifts Considered Separate Property During a Divorce?

According to Tennessee law, gifts and inheritance are considered separate property. This means that they are not subject to division during a divorce. However, similarly to how a home can become joint property over time, an individual gift or inheritance can become marital property.

In general, Tennessee typically considers gifts given to one spouse as separate property, while gifts jointly given to both spouses are usually deemed marital property. It is important to understand, however, that the intent of the giver will also be factored into this decision. 

Examples of Gifts That Are Typically Separate Property

Gifts that often constitute separate property in Shelby County include:

• Jewelry, vehicles, or money gifted by a third party
• Birthday or anniversary gifts addressed to one spouse
• Gifts from one spouse to the other

Examples of Gifts That Are Typically Marital Property

Gifts that are generally considered marital property, and thus may be subject to division during a divorce, include:

• Wedding gifts for the couple
• Household items gifted jointly
• Property titled in both spouses’ names (like a car, for example)

When Can a Gift Become Marital Property?

Under certain circumstances, a separately owned asset may become marital property. Knowing what actions can convert property is critical.

Commingling

When assets are combined, they can turn separate assets into marital property. For example:

• Depositing an inheritance into a jointly owned account
• Mixing gifted money with other marital funds

Transmutation by Use or Title

• Adding a spouse to a deed or title
• Using gifted funds for marital property (like using an inheritance to remodel your home)

Ongoing Marital Contributions

When you use jointly owned funds to make payments or your spouse helps contribute to the maintenance of an asset, it can be considered marital property. For example:

• Using assets from a joint bank account to pay for car insurance
• Letting your spouse add an addition to your separately owned vacation property

Documentation That Helps Protect Gifts as Separate Property

Unfortunately, proving when a gift is considered marital versus separate property can be difficult. However, with proper documentation, you can help protect your right to your separately owned property.  Helpful documentation to retain includes:

• Gift cards or notes
• Receipts 
• Proof of purchase
• Deeds or titles in only one name
• Bank records to show separate accounts
• Inheritance documentation from probate records

Having proper documentation is critical, as it helps provide objective proof of the classification of the property. However, because assets can become marital property, your spouse may try to claim that the asset has become marital property. Unfortunately, disputes often arise over gifts because of poor record-keeping and ambiguity of intent from the giver, which is why keeping accurate records is critical. 

Connect With our Shelby County Divorce Attorneys

Going through a divorce can be an incredibly difficult and overwhelming experience. Unfortunately, matters may be made even more complicated during the contentious process of dividing assets. As such, it is in your best interest to connect with an experienced attorney at Rice Law. Our team will examine your circumstances to help you fight for the best possible outcome. Contact us today to learn how we can represent you.