What is Transmutation in Tennessee Divorce Property Division?

Divorce is never easy, and some issues – especially when it comes to the kids – are harder to deal with than others. For a lot of couples, it’s the division of assets that really puts them through the ringer. Some folks marry at very young ages and neither has any significant assets to speak of, while others may bring to the marriage a considerable inheritance, or an incredibly successful business.

So let’s say Bob (who has a lot of assets) married Jane (who has very little assets). Bob shares all his assets and property freely with Jane, because they are blinded by new love and a devotion to the idea that they will both live happily ever after together. Bob even transfers his property so they both have ownership, and takes his cash inheritance to put a down payment on the home that he and Jane work to buy. This is transmutation: the conversion of separate property into marital property under Tennessee law.

And that’s perfectly fine – until Jane and Bob decide they want to get divorced.

As simplified look at a complex legal principle

When it comes time to divide the assets in divorce, imagine the couple sitting at a conference table with a big pile of blocks. To come up with an agreement on the division of assets, those blocks need to be divided into three distinct piles: His, Hers and Ours. The “His” and “Hers” piles represent each party’s non-marital assets, and the “Ours” pile represents the marital assets that will be divided in the divorce.

So Bob keeps his art collection, and Jane keeps all of the furniture, and so on and so forth. But what about the house? Or the money from Bob’s inheritance now sitting in the joint bank account?

Even if the inheritance was once considered separate property, once it was made available to the couple by depositing it in a joint account, or in purchasing the family home – once it was transmuted – it ceases to be separate property. And because it was transmuted, Jane is now entitled to an equitable share of those assets.

Is there a way to keep separate property separate?

If a person enters into a marriage and they want to protect their highly successful business or significant portion of their inheritance from the possibility of divorce, they can use a pre-nuptial agreement. If their prospective spouse agrees and signs it, after consulting with a trusted matrimonial attorney, then their property is protected from the asset division process in divorce. For business owners, a buy-sell agreement could also come in handy, as it dictates how the business will be divided (or if it will be divided) in the event of a divorce. The easiest way to keep things separate, however, is to keep separate property separate. I know a few couples who have their own separate bank accounts (into which they deposit their own, separate paychecks), and maintain one joint account to which they both contribute for household bills and items. It’s not the ideal situation, perhaps, but it could make things easier in the long run.

Property division is one of the most contentious issues in divorce. At the Law Offices of LaFevor & Slaughter, we are here to protect your interests and guide you through the adversarial process of dividing assets as you end your marriage. Please give us a call at 865-637-6258 or you can fill out our contact form to schedule a consultation to discuss your case with an experienced Knoxville divorce lawyer today.