Marital Property after Spouses Separate, part 2

26 July, 2010 by Lawrence in Divorce, Property Division

A few weeks ago, I wrote that property you purchase after the divorce complaint has been filed, but before the final hearing, is considered marital property and can be divided by the court.  This is a simple concept, but sometimes the facts of your case can make the rules seem unfair.

For example, suppose the wife of a wealthy lawyer files for divorce in January, and the couple spends several months negotiating a settlement.  Eight months later, they still haven’t got the divorce settled, and the lawyer gets awarded a big fee in a case he’s been working on for several years.  When I say “big”, I mean a fee in the amount of $17,000,000.  It’s been almost a year since the couple split up, is the wife entitled to some of that money?

The Tennessee Supreme Court was kind enough to release an opinion to answer this exact question.  The most important part of the discussion surrounds what the word “and” means in the definition of marital property.

As read by the court, the definition says marital property is property owned “as of the date of filing of a complaint for divorce” and acquired “up to the date of the final divorce hearing.”

“Small words are big words in the law”

This is an old saying that law students hear over and over in lectures.  The difference between or and and can make all the difference in your case.  Generally, when the lawmakers use and in a statute, they are indicating that more than one condition must exist at the same time.  On the other hand, if you see the word or, it indicates that the statute applies if either condition exists.

For example,  drinking or driving is not as big a deal as drinking and driving.

Based on this rule, the husband in this case tried to interpret the definition of marital property to mean that property would only be considered marital if it was owned at the time of the complaint for divorce, AND was purchased before the final hearing.

Of course, anybody can see that this interpretation makes no sense whatsoever.  As pointed out by the Court, the complaint for divorce will always come before the final hearing.   Therefore any property owned at that time would necessarily have to have been acquired before the final hearing, which would make the second half of the above definition pointless.

The Court said in this case, the word “and” is used to join two different sets of property.  The first set is the property the couple owned at the time the complaint for divorce was filed.  The second set is property that is acquired up to the date of the final hearing.  These two sets together form the estate of marital property the court will have to divide.

The end result was the court found that the marital estate (including the $17,000,000 fee) was worth just under 30 million.  The wife was awarded 40% as a result of the equitable division.

What you need to know

Most of us aren’t fortunate enough to have an estate worth 30 million dollars, but the exact same principles at work here may affect whether or not you’ll be able to keep your car, the home furnishings, or other items that are important to you.  If you will be ending your marriage and you’re concerned about how your property will be divided, contact me for help.