Are Tennessee Divorce Laws Unfair to Homemakers?
A recent case decided by the Tennessee Supreme Court has many asking whether Tennessee divorce laws are unfair to homemakers. At first glance, the end result in that recent case of Keyt v. Keyt might appear unfair: Mrs. Keyt, a stay-at-home mother for almost all of the parties’ 15-year marriage, was not entitled to any share of $2 million in cash and real estate received by her husband from the sale of certain stock given to him by his parents. Instead, she was entitled to less than $500,000.
Underlying the superficial disparity of the end result is a rationale that is fair, equitable, and fully compliant with existing divorce laws. To appreciate that rationale, a loose understanding of “separate property” and “marital property” is necessary.
At its most basic level, separate property is anything owned by one spouse prior to the marriage, or received by one spouse through gift or inheritance during the marriage. Marital property is everything otherwise acquired by either spouse during the marriage. In Tennessee, divorcing couples divide their marital property, yet keep their separate property.
Because the stock was given to Mr. Keyt as a gift from his parents, it was his separate property, not subject to division in a divorce. However, the Supreme Court’s analysis did not end there. Tennessee law also provides that under one condition, if the value of separate property increases during a marriage, the amount of the increase itself is marital property subject to division in a divorce. The condition that enables one spouse to lay claim to the increase in value of the other spouse’s separate property is that “each party substantially contributed to the asset’s preservation and appreciation.”
Mr. Keyt had worked twenty-four years for the company in which his parents gave him stock. However, the Supreme Court was persuaded by the argument of Mr. Keyt’s attorney that there was no evidence that Mr. Keyt was anything more than a mid-level employee of a large company. As such, he did not substantially contribute to the increase in value of that company.
The Supreme Court’s decision to classify the increase in Mr. Keyt’s stock value as his separate property did not rest on any failure to recognize the value of Mrs. Keyt’s role as a homemaker and stay-at-home mother. To the contrary, the Court acknowledged that Mrs. Keyt’s contributions as a homemaker were sufficient to entitle her to a share of the fruits of her husband’s labors. The basis of the decision was that the increase in the stock’s value simply was not a fruit of the husband’s labor.
The importance of substantial contribution of each spouse is clear in this case. As a homemaker, Mrs. Keyt clearly made a substantial contribution to her husband’s ability to work at his job. If Mr. Keyt’s job had in turn substantially contributed to the stock’s increase in value during the marriage (if he had been a corporate executive or officer, for example), the end result would not be so disparate.
Still up for grabs is the roughly $500,000 of assets accumulated during the Keyts’ marriage and considered marital property. Mrs. Keyt will likely benefit from Tennessee law that enables a court to award a larger share of marital property to one spouse when the other spouse has substantial separate assets.
