A Matter of Equitable Distribution: A Recent Ruling
Posted by Martin Heller Potempa & Sheppard, PLLC on September 7, 2018
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Like many states throughout the country, Tennessee is an equitable distribution state. What does this mean exactly? When couples divorce, there is an expectation that they will divide marital assets and debts. Notably, this does not always translate to a 50/50 split.
In determining equitable distribution, the courts take a number of factors under consideration. For starters, it is critical to understand what constitutes marital property. The definition contained in TCA 36-4-121 states that at least the following are included:
Income, including wages, pension, stock options, retirement and fringe benefits. These may require evaluation by a forensic accountant.
Real property, which may also include separate property if each party substantially contributed to its preservation and appreciation.
Recovery in personal injury, workers’ compensation, social security disability actions, and other similar actions for the following: wages lost during the marriage, reimbursement for medical bills incurred and paid with marital property, and property damage to marital property.
The preceding is just a basic breakdown of the items considered marital property. Meanwhile, some things are regarded as separate property and not subject to equitable distribution. At the very least, these would include awards for pain and suffering or property received as part of an inheritance.
Recent Case on Equitable Distribution
Earlier this year, the Court of Appeals ruled on issues of equitable distribution in Disterdick v. Disterdick. Among other things, the court made a determination regarding what constituted marital property versus separate property.
Desiree and John Disterdick married in 1986 and had five children together. In 2012, Desiree filed for divorce, citing “irreconcilable differences or, in the alternative, that her husband was guilty of inappropriate marital conduct.” Although she requested alimony, that is not the subject matter of this particular article.
One of the reasons that John appealed the lower court’s ruling involved an oil partnership that was determined to belong to Desiree. John felt it should be treated as marital property and divided equitably. However, both the lower court and appeals court disagreed with his assertion. The asset was held in Desiree’s name and substantially reduced in value.
John also attempted to claim that changes to Desiree’s engagement ring made it a marital asset. However, the court found the ring and Desiree’s fur coat to be separate property not subject to equitable distribution.
In the meantime, an issue also arose concerning a trust – in which Desiree and her mother were beneficiaries. Although John submitted that he formed the trust with his own funds, the court determined that it was not in a position to change the named beneficiaries.
The bottom line is that there are several considerations when it comes to determining equitable distribution. At Martin Heller Potempa & Sheppard PLLC, we can explain the relevant factors and give you a clearer understanding of the legal issues. Give us a call to schedule an appointment to discuss your concerns.
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