Facts: The parties separated after 13 years of marriage. Husband accumulated a sizeable estate prior to the marriage, mostly through an inheritance. The trial court divided the marital estate and awarded Wife alimony in futuro. The only issue of interest to me is the annuity valued at $202,000. Husband purchased the annuity during the marriage with funds from his separate assets. Wife was listed as the primary beneficiary. Because the annuity was purchased during marriage with Husband’s separate funds, the trial court found it to be separate property. Wife appealed.
On Appeal: The Court of Appeals affirmed the trial court.
Wife argued annuity should have been classified as marital property. Specifically, she claimed the record did not support the finding that the source of the funds used to acquire the annuity was Husband’s separate property.
Tennessee Code Annotated § 36-4-121(b)(2)(B) and (C) define separate property as “property acquired in exchange for property acquired before the marriage” or “income from and appreciation of property owned by a spouse before marriage except when characterized as marital property under subdivision (b)(1).” Thus, accounts opened with funds from these sources remain separate property even though opened during the marriage.
The Court reviewed the record and concluded:
We concede that the proof is not overwhelming. Husband, however, testified that the money came exclusively from his separate property, and the only income-producing property he had was either acquired before the marriage or inherited. Wife had worked until 2000 drawing a salary of $30,000 per year, but she deposited her checks in her separate account and her contributions to the marital expenses were minuscule. She did not have any separate income in 2003, the year the annuity was acquired. . . . We think the trial judge correctly classified the annuity as the husband’s separate property.
Wife also argued that even if the property was Husband’s separate property, it became marital property by transmutation, i.e., by placing it in the name of both spouses. The Court made short work of this argument, stating:
The proof, however, is clear that husband was always listed as the owner of the annuity with wife as the beneficiary. Wife testified that she “understood” the annuity was jointly owned, but there is no proof of where that understanding came from. The record is also devoid of any proof that wife substantially contributed to the preservation or appreciation of this asset.
Thus, the trial court’s classification of the annuity as Husband’s separate property was affirmed.
Information provided by K.O. Herston: Knoxville, Tennessee Divorce, Matrimonial and Family Law Attorney.