Facts: Husband and Wife divorced after 28 years of marriage. Because they had no minor children, the trial focused on classifying and dividing their property.
During the marriage, Wife inherited assets from her mother, including an investment account at Raymond James and an IRA worth about $45,000. Wife deposited the inherited Raymond James funds into a jointly titled bank account with Husband that had rights of survivorship. Husband had equal access to this joint account, though he never withdrew any funds from it.
Shortly after the parties separated, Wife transferred $279,667 from the joint account into a new Fidelity investment account in her name alone. Over the next few years of the divorce proceedings, Wife withdrew approximately $182,228 from the Fidelity account for various purposes. She testified that she used those funds for living expenses, moving costs, debt repayment, holiday family gifts, a $30,000 vehicle, and approximately $24,000 in attorney’s fees. By the final day of trial, the Fidelity account’s value had dropped to roughly $88,830.
Husband’s primary asset was his federal Thrift Savings Plan (“TSP”) retirement account from his postal service employment. It was valued at about $512,221 at trial, of which $255,000 was his premarital balance, i.e., his separate property.
Husband argued that only the TSP’s value as of the date of separation (approximately $280,000) should be treated as marital property, with post-separation growth belonging to him alone. He also contended that Wife’s inherited funds became marital property through transmutation when she deposited them into the joint account and that Wife had dissipated marital assets by unilaterally spending down the Fidelity account.
Husband’s position was that the marital portion of the TSP (about $280,000) was roughly equal to the value of the Fidelity account at separation, so an equitable division would be for him to keep the entire TSP and for Wife to keep the Fidelity account.
Wife maintained that the Fidelity account was her separate property because it stemmed from her inheritance. She testified that she added Husband’s name to the Raymond James funds solely for “estate planning purposes,” not to gift those funds to the marriage. She emphasized that Husband never actually used the joint account and cited prior cases in which inherited funds in joint accounts were deemed separate property because they were titled jointly solely for convenience or estate planning. Wife also insisted that her expenditures from the Fidelity account were for legitimate living expenses after the separation, not wasteful or made in bad faith, and thus should not be deemed dissipation of marital assets.
The trial court classified both the Fidelity investment account and the TSP retirement account as marital property. The trial court found that Wife’s act of placing inherited funds into a joint account with Husband evidenced an intent to treat those funds as marital property, thereby transmuting the inherited funds into the marital estate. The trial court also found that Wife had dissipated $182,228 of marital funds through unexplained spending from the Fidelity account during the divorce.
In dividing the property, the trial court treated the Fidelity account as if it still held $280,000 (the approximate amount before Wife’s withdrawals) and divided that value equally between the parties, i.e., $140,000 each. Because only about $88,830 remained in the Fidelity account at trial, the trial court offset the difference by awarding Husband a larger share of the TSP. Specifically, Husband received roughly $372,000 of the TSP, and Wife about $140,000 of the TSP. In practical terms, this meant Husband kept the entire TSP (valued at approximately $512,000), and Wife kept what was left of the Fidelity account (around $88,000), with no additional cash changing hands.
The trial court’s final order listed the remaining assets and debts divided between them: each kept their half of the previously split house-sale proceeds; Husband kept his truck and a hunting club interest; Wife kept her car, her separate IRA (acknowledged as her separate property), and so on.
Believing this outcome to be inequitable, Wife repeatedly asked the trial court to explain its reasoning. At the close of proof, Wife’s attorney specifically requested that the trial court make detailed findings of fact and conclusions of law to justify the disproportionate division. The trial judge denied the request, stating, “Your request is denied.”
Wife filed a Rule 59.04 motion to alter or amend the judgment, or at least to make specific findings under Rule 52.01 supporting the property division, but that too was denied.
Wife appealed the decision, arguing that the Fidelity account should have been classified as her separate property, that the finding of dissipation was error, that the overall division of the marital estate was not equitable, and that the trial court failed to make the required findings of fact to support its rulings.
On Appeal: The Court of Appeals affirmed part of the ruling and reversed part of it. In a split decision, the trial court’s classification of the Fidelity account as marital property was affirmed, but the finding of dissipation and the final division of marital property were vacated and remanded for further proceedings.
Tennessee is a “dual-property” state: separate property (like inheritances) is not divided in divorce, while marital property is subject to equitable division. By law, assets acquired by either spouse during the marriage are generally marital, but property acquired by gift or inheritance is separate. However, separate property can become marital through transmutation if it’s treated in a way that indicates an intent to make it marital.
Under Tennessee law, when a spouse deposits separate funds into a joint account with the other spouse, a rebuttable presumption arises that the deposit was intended as a gift to the marital estate. This presumption of transmutation can be overcome only by evidence showing a clear intent to keep the property separate. Whether transmutation occurred is a question of fact that depends on the circumstances of each case.
In Tennessee, dissipation of marital assets is defined as “wasteful expenditures which reduce the marital property available for equitable distribution and which are made for a purpose contrary to the marriage.” Such spending can be deemed dissipation whether it occurs before or after a divorce complaint is filed. Tennessee courts have explained that dissipation involves money spent on pursuits unrelated to the marriage while the marriage is breaking down. Not every questionable expense is dissipation; courts must distinguish true waste from ordinary discretionary spending that, while perhaps imprudent, is consistent with the parties’ standard of living during the marriage.
The spouse alleging dissipation bears the burden of proof to make a prima facie case, after which the burden shifts to the other spouse to prove the expenditures were justified and not dissipation.
Tennessee law also requires trial courts to make specific findings of fact and conclusions of law in bench trials. Rule 52.01 of the Tennessee Rules of Civil Procedure mandates that in all non-jury trials, the court “shall find the facts specially and state separately its conclusions of law.” This requirement is not a mere formality; it ensures that the parties and the appellate court understand the basis for the trial court’s decisions. When a trial court fails to provide sufficient findings, appellate courts often must either “soldier on” with their own review of the record or vacate and remand for proper findings. Vacating and remanding is the preferred approach, especially when the issues are fact-intensive or depend on witness credibility, as is common when dividing a marital estate.
The Court of Appeals first addressed the classification of the Fidelity account. The Court agreed with the trial judge that Wife’s actions created a presumption that she intended the inherited funds to become marital property. Wife argued that she never intended to gift the funds to the marriage, but the Court found no evidence sufficient to rebut the presumption that the jointly-titled funds were marital. The Court of Appeals found no error in the trial court’s decision to treat the Fidelity account as marital property:
Ultimately, we cannot find reversible error in the trial court’s conclusion that Wife transmuted the funds from the Raymond James account when she placed them into a joint Fidelity account.
Next, the Court addressed the finding of dissipation. It agreed with Wife that the trial court’s analysis was incomplete. The trial court did not explicitly apply the burden-shifting framework required by Tennessee law. In fact, it appeared the judge placed the burden on Wife to justify her spending without first determining that Husband had made a prima facie case of dissipation. The Court of Appeals stopped short of deciding whether Wife’s expenditures were actually dissipation. Instead, it concluded that the trial court needed to analyze the issue under the proper legal standard and make findings accordingly:
From our review of the trial court’s order in the present case, it is not apparent that the trial court applied the proper burden-shifting framework or the applicable standards for assessing whether Wife’s expenditures of funds in the Fidelity account amounted to dissipation. To the contrary, the trial court appears to have imposed the burden upon Wife in the absence of having determined an adequate prima facie showing was made by Husband. We do not make any determination regarding whether the expenditures amounted to dissipation. Our conclusion is more modest in scope. We instead vacate and remand for the trial to make determinations in accordance with the appropriate framework and applicable standards for distinguishing intentional, purposeful, and wasteful dissipatory expenditures from those that are not.
Finally, the Court addressed the overall division of the marital estate and the trial court’s lack of findings. The appellate court was clearly concerned that the trial judge failed to explain how he arrived at such an uneven division of assets. By simply stating he “considered a number of factors” without identifying them, the trial court did not comply with Rule 52.01 or enable effective appellate review. Because dividing a marital estate requires balancing many statutory factors and often depends on credibility and detailed facts, the Court of Appeals decided it could not merely reweigh the evidence itself. It ruled that the proper remedy was to send the case back to the trial court to make the required findings and reconsider the property division, if necessary. The Court of Appeals explained:
Here, the trial court failed to identify the relevant statutory factors or explain how the factors impacted its decision. The statement in the final order that the court “consider[ed] a number of factors” … is insufficient to permit us to determine what those factors were, which facts the court determined were relevant to the factors, and how the analysis of the factors as a whole guided the court’s decision-making.…
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We conclude that the appropriate remedy in this case is to vacate the portion of the court’s order regarding the division of marital property and to remand for the trial court to make appropriate findings of fact and conclusions of law in accordance with the relevant statutory factors.
The Court of Appeals affirmed the trial court’s ruling that the inherited Raymond James/Fidelity account had transmuted into a marital asset. However, it vacated the finding that Wife dissipated $182,228 and vacated the entire division of marital property because the trial court’s analysis and explanation were insufficient. The case was remanded to the trial court for reconsideration of those issues, consistent with the appellate opinion.
K.O.’s Comment: This is a textbook example of how commingling an inheritance with marital assets can backfire. Tennessee law presumes that depositing separate funds into a joint account is a gift to the marriage. Here, Wife couldn’t overcome that presumption. The best advice for anyone who receives an inheritance during marriage is to keep it in a separate account in your name only. Otherwise, you risk the fate that befell Wife here—seeing your separate property turned into a marital asset that gets divided with your ex.
Source: Swafford v. Swafford (Tennessee Court of Appeals, Eastern Section, January 23, 2026).
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