Tuesday, April 15, 2008

Impact of Tennessee Case Greatly Exxagerated

A news report and analysis of a four month old decision in this morning's The Tennessean passes along fears that the rights of divorcing homemakers could be damaged as the result of the Tennessee Supreme Court's ruling in that case. However, the actual decision does not seem nearly that far reaching.

Under Tennessee law, as in other states, in dividing property in a divorce case, the court differentiates between marital and separate property (Note: this is a summary on a blog for a general audience, not a legal brief, so the following will not attempt to sort out all of the technical legal details that can come up). Separate property includes that which was owned by either party prior to them becoming married. Sometimes, when the value of separate property increases over the years of the marriage, that appreciation can be considered to be marital property. For it to be considered marital property, both spouses must have contributed directly or indirectly to the appreciation. Tennessee statutes specify that being a homemaker can be considered a contribution.

In this case, the husband had been given some stock in his parents' trucking company prior to becoming married to the wife. The husband also worked in various low to mid-level jobs for the business. The wife was a homemaker. However, the opinion in no way argues against the wife meeting the requirement for having contributed to the increase. To the contrary, the opinion took the view that the husband's employment was at a sufficiently low level that he really did nothing to impact the growth of the business. It would basically be equivalent to saying that, just because a janitor at Dell owns Dell stock, it cannot be said that because of his employment at mopping floors that he is contributing to any growth in the value of the company.

Thus, this seems to be a fact dependent case that in no way erodes the rights of a homemaker with regard to the appreciation of separate property.


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