Q: Bought house with son 2010. He married 2016. Does property become marital asset if we refinance it now?
Generally speaking, in the State of Tennessee, marital property is divided, but separate property is not. All of the property is identified, classified and valued. Tennessee is an “equitable distribution” state, which means that once the property is classified as marital or separate, the trial court has to divide it equitably. T.C.A. Section 36-4-121(c). However, marital property is not always divided 50/50. Instead, it is divided “equitably.”
In certain circumstances, an entire asset could be given to one spouse.
“Separate Property” is all real and personal property owned before marriage, gifts and inheritances.
With regard to “marital property,” the courts look at:
1. The duration of the marriage;
2. The age, physical and mental health, vocation skills, employability, earning capacity, estate, financial liabilities and financial needs of each of the parties;
3. The tangible or intangible contribution by one party to the education, training or increased earning capacity of the other party;
4. The relative ability of each party for future acquisitions of capital assets and income;
5. The contribution of each party to the acquisition, preservation, appreciation, depreciation or dissipation of the marital or separate property, including the contribution of a party to the marriage as homemaker, wage earner or parent, with the contribution of a party as homemaker or wage earner to be given the same weight if each party has fulfilled its role (who contributed more or performed the marital role more);
6. The value of the separate property of each party;
7. The estate of each party at the time of marriage;
8. The economic circumstances of each party at the time the division of property is to become effective;
9. The tax consequences to each party; costs associated with the reasonably foreseeable sale of the asset, and other reasonably foreseeable expenses associated with the asset;
10. The amount of social security benefits available to each spouse; and
11. Such other factors as are necessary to consider the equities between the parties.
In spite of the “general” statement mentioned above, courts do consider separate property. If one spouse has more “separate” property, then the other spouse will usually be given more “marital” property.
In direct answer to your question, the appreciation of “separate” property during the marriage can become “marital” property. The test is whether the non-owning spouse proves that both spouses substantially contributed to its preservation and appreciation.
Also, if separate property is inextricably mingled with marital property or separate property of the other spouse, then the courts look at it as a “gift” to the marital property, which, as stated above, is divided.
There is also a concept of “transmutation.” This is when there is evidence of an intention that the separate property be marital.
The issues that are of concern to you are complex.
Anthony M. Avery agrees with this answer
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