How Do Tennessee Courts Treat Inheritance in a Divorce?

During a divorce, understanding how inheritance and related assets are treated is crucial, especially in an equitable distribution state like Tennessee. Protecting your financial interests and future should be your top priority during this process, so continue reading for more information regarding the differences between marital and separate property. Consult with a Memphis, Tennessee property division lawyer to obtain the help of a skilled legal professional today.

Is Tennessee an Equitable Distribution State?

Tennessee is an equitable distribution state, meaning that when a couple divorces, marital property is not automatically divided equally. Instead, the courts aim for a fair division, considering various factors to determine what is equitable, or just and right, under the circumstances of the marriage.

Equitable distribution only applies to marital property, which is assets acquired by either or both spouses during the marriage. Separate property is generally excluded from this division process. The court evaluates factors like the length of the marriage, each spouse’s age, physical health, skills, and contributions to the marriage to achieve an equitable result.

How Do TN Courts Treat Inheritance in a Divorce?

If you inherited property from a relative or loved one, it’s important to understand how to protect it during a divorce. In Tennessee, assets received by one spouse as an inheritance are generally classified as separate property. As established, separate property is not considered part of the marital estate and is therefore not subject to division during a divorce proceeding. The spouse who inherited the asset typically retains full ownership.

However, an important exception relates to the appreciation in value of the inherited asset. Any increase in the value of separate property that occurs during the marriage due to the contributions, efforts, or labor of the other spouse or marital funds may be classified as marital property. In these cases, only the increase in value is subject to division, while the original inheritance remains separate.

What is Commingling?

Another way that inheritance (or a portion of it) can be considered a marital asset is through the process of commingling. Commingling occurs when separate property, such as inherited funds, becomes mixed with marital property to the point that its separate identity can no longer be traced or clearly distinguished. This often happens when separate funds are deposited into joint bank accounts or used to purchase assets titled in both spouses’ names.

Once commingled, the asset, or part of it, can lose its separate property classification and be treated as a marital asset subject to equitable division. Examples of commingling include:

• Depositing inherited money into a joint checking account used for household expenses
• Using inherited funds as a down payment on a house titled in both spouses’ names
• Transferring inherited stock into a jointly held brokerage account where marital funds are also invested

If you want to protect your inheritance from distribution, understanding how to maintain its separate characteristics is crucial. Reach out to an experienced attorney for more information and legal advice today.