Something that comes up quite a bit in my divorce intakes is whether or not property is separate property or marital property. Retirement accounts can be very tricky in this regard, because people generally don’t keep them completely separate, and frequently dip into them when they need money, even if they know they should not. If you have a prenuptial agreement, you may have protected against this already in advance for a divorce, but if not there is a good chance that your separate property may have been transmuted into marital property by a divorce court in Tennessee.
The Appellate Court recently issued a new opinion in Kathryn Jones v. Gary Jones that does a decent job of explaining to people contemplating a divorce in Tennessee how this works. Basically, if you add marital funds to your brokerage account, or pay for the loan against your brokerage account with marital funds, deposit funds from marital accounts into your brokerage account, and transfer funds from your brokerage account to your marital account, there is a very good chance you have transmuted the entirety of your account from separate to marital property by commingling the funds. Evidence that it was not intended to be commingled could not be presented. Perhaps if the Husband had required a prenuptial agreement which specifically protected his premarital stocks this would have demonstrated it was not the intent to commingle those specific premarital assets.
This case also does a good job of illustrating how important it is that multiple individuals and advisers are on board and working together and understanding the true financial impact of a marriage. A lot of this could have been avoided by simply creating a second account for any retirement contributions during the marriage, and then those could have been tapped for any marital spending instead of the marital property. Although there would still be an issue for the lawyers in the divorce regarding the use of marital funds to pay off the loan, there is a more solid argument that it was intended to be separate property. You can read the full opinion HERE.
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Attorney Morgan Smith is a divorce lawyer located in Nashville, Tennessee. She practices divorce law primarily in Davidson, Wilson, Sumner, Williamson and Rutherford Counties, and also represents employees in worker’s rights cases in Federal Court for fun. Are you looking at a possible divorce with the possibility of commingled assets and need a divorce lawyer to ensure you receive informed representation? Set up an initial consultation for your divorce by calling us at (615) 852-5028 for a phone appointment, or email us at office@lawonyourschedule.com.
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