Splitting Assets in a Divorce: What’s Yours in the Divorce Settlement?
If you’re headed for divorce, you’ve probably wondered – am I really going to lose half my assets automatically? That myth has been floating around forever. But things aren’t so simple.
The truth is, who gets what depends a lot on where you live and your personal situation.
Some states make divorcing couples split everything 50/50. But others use what’s called “equitable distribution.” That means looking at stuff like: who paid for what, who needs what going forward, and other practical factors before deciding the final split. Tennessee’s one of those equitable states, by the way. No forced even splits here.
Navigating all the rules around dividing up your property can get confusing and fast. But getting up to speed is important if you want the fairest possible outcome. So, here are the key things to know about what’s actually yours to keep in a divorce.
Marital Property Vs. Separate Property
Separate property is property acquired by one spouse before marriage. This could be houses, retirement funds, and inheritance.
Marital property, on the other hand, is property or assets acquired during the course of the marriage. This is the type of property that is subject to strict property division rules during the divorce process.
Separate property is yours to keep. Well, usually.
The Danger of Intermingling Funds
Some couples make the mistake of commingling assets. For example, let’s say you own a car. This car has been your personal property since before the marriage. What if you start a delivery business? You open an account at a financial institution jointly and deposit the proceeds into the account.
While your personal asset generated the income, the funds have been intertwined and will be treated as marital property.
Let’s talk about how the courts handle property division.
How the Court Divides Marital Assets
Firstly, do you know what property can be considered marital property?
Here are some examples:
- Bank accounts
- Retirement accounts
- Real estate
- Money market accounts
These would be marital assets if they were acquired during the marriage. Dividing assets gets very tricky with marital assets.
There is no automatic assumption of 50/50 sharing in Tennessee, as this is not a community property state. Instead, marital property is divided using the rules of equitable distribution.
The following elements are taken into account by the court when dividing marital property fairly under Tennessee law:
- How long the marriage lasted
- Each spouse’s:
- Physical condition
- Mental state
- Employment or employability
- Income potential
- Current and future financial obligations
- Reasonable financial needs
- Each spouse’s financial situation
- The tax consequences for each spouse, the price of selling the asset at a reasonable price, and any other reasonably foreseeable costs related to the asset
- The worth of each spouse’s separate property.
This is not an exhaustive list. The court has a lot of discretion in exercising equitable distribution under the law.
Whether you have only a few assets in a divorce or a substantial estate, retain an experienced divorce attorney to discuss how the court will likely divide the property. Let us help you ease the burden of coming to a divorce settlement agreement.
Protecting Retirement Accounts
In property division disputes, it makes sense to want your retirement fund all to yourself.
Any investments or 401(k) earnings made before a couple gets married is considered separate property by each spouse. However, proceeds of a 401(k) that a spouse contributed to or received income from during the marriage are considered marital property. They will be split equally in the event of a divorce.
This can get pretty technical.
A Qualified Domestic Relations Order (QDRO) is a court order that specifies one spouse’s right to access the other spouse’s pension or retirement account. This can be as much or as little as you both agree to. QDROs are used in divorce proceedings to distribute retirement funds.
Contact Us Today
If you are concerned about losing what you have worked for to your soon-to-be ex, contact the Law Office of Sam Byrd to discuss your options for a divorce agreement.