Division of Marital Property and Alimony Reversed: Hatfield v. Hatfield

Husband and Wife divorced after 24 years of marriage, with three minor children. The trial court found that the Wife had a financial need of $2,300.00 per month, but the Husband only had an ability to pay $1,500.00 per month. Since there were no assets from which an award of alimony in solido could be paid immediately, the Court awarded the Wife a “larger portion of the marital property in lieu of alimony in solido.”

The Wife was granted a divorce on the grounds of adultery by the Husband. The Wife was awarded 100% of the equity in the marital home (including the Husband’s share of equity), which totaled $242,227.00, and the remaining funds in Husband’s 401K, which equaled $40,872.12. Each party was granted his or her own bank account, and the Court did not find any other marital assets of significant value. The Court further awarded Wife alimony in futuro in the amount of $1,500.00 per month, stating that the Court awarded the Wife “a larger share of the property because the Husband cannot afford to pay her need.”

Husband appealed and argued that the trial court erred in deciding the property division and alimony.

Trial courts are responsible for classifying a couple’s property – as either separate or marital property – and then with equitably dividing the marital property. Equitable division of marital property is not necessarily an equal division. In this case, the trial court awarded almost all property to the Wife (99% according to Husband’s calculations, and 96.5% according to Wife’s calculations).

When dividing marital property, Tennessee Code Annotated §36-4-121(c) sets forth factors for the court to consider:

(1) The duration of the marriage;

(2) The age, physical and mental health, vocational skills, employability, earning capacity, estate, financial liabilities and financial needs of each of the parties;

(3) The tangible or intangible contribution by one (1) party to the education, training or increased earning power of the other party;

(4) The relative ability of each party for future acquisitions of capital assets and income;

(5)(A) The contribution of each party to the acquisition, preservation, appreciation, depreciation or dissipation of the marital or separate property, including the contribution of a party to the marriage as homemaker, wage earner or parent, with the contribution of a party as homemaker or wage earner to be given the same weight if each party has fulfilled its role;

(B) For purposes of this subdivision (c)(5), dissipation of assets means wasteful expenditures which reduce the marital property available for equitable distributions and which are made for a purpose contrary to teh marriage either before or after a complaint for divorce or legal separation has been filed.

(6) The value of the separate property of each party;

(7) The estate of each party at the time of the marriage;

(8) The economic circumstances of each party at the time the division of property is to become effective;

(9) The tax consequences to each party, costs associated with the reasonably foreseeable sale of the asset, and other reasonably foreseeable expenses associated with the asset;

(10) The amount of social security benefits available to each spouse; and

(11) Such other factors as are necessary to consider the equities between the parties.

Wife completed three years of college, but she was primarily a stay at home mother after the parties’ first child was born. Wife previously held a real estate license, but it had lapsed as of the time of the divorce hearing. Wife’s highest gross income during the marriage was approximately $22,000 in 1989. At the time of trial, the Wife listed her monthly financial needs at $4,444.00, and her monthly income was $690.00. Husband’s monthly financial need was $4,892.00, and his net monthly income was $4,982.46.

Wife argued that Husband dissipated assets by withdrawing funds from 401K. However, those withdrawals were each authorized by the trial court to cover his temporary financial obligations while the divorce was pending and to pay each party’s attorney fees and litigation expenses.

The Tennessee Supreme Court has approved using the division of marital property to help meet the financial needs of a disadvantaged spouse. The appellate court agreed with the trial court’s decision to award Wife a greater share of the marital property. However, the appellate court disagreed with the percentages awarded. Therefore, the appellate court modified the trial court’s property division to award the Husband’s 401K funds to Husband rather than to Wife. Wife retained the entire equity in the parties’ home.

Husband also argued that the trial court erred in awarding alimony in futuro rather than transitional alimony. The most important considerations for a trial court in awarding alimony are the need of the disadvantaged spouse (the spouse seeking support) and the ability of the obligor spouse to pay support.

Husband argued in this case that Wife did not have a financial need for alimony because she had net assets worth approximately $400,000. Even though Wife claimed her monthly financial need was $4,400, the trial court found her actual need to be $2,300 per month, which Husband did not dispute.

Husband’s net monthly income was $4,982.46. His child support obligation was $1,357 per month, and his alimony obligation was set by the trial court at $1,500 per month. This left Husband with $2,125.00 after child support and alimony to cover his monthly living expenses. The appellate court, therefore, found that the trial court erred when finding that the Husband had an ability to pay $1,500 per month to the Wife.

The monthly alimony amount was modified to $1,200 per month.

The appellate court also found that the trial court should not have awarded alimony in futuro. The Tennessee legislature has expressed a preference for more short-term forms of alimony over alimony in futuro. It is not always possible to guarantee a spouse the same standard of living enjoyed during the marriage. Therefore, the appellate court changed the Wife’s alimony to transitional alimony, which is a type of alimony awarded when the court finds that rehabilitation of that spouse is not necessary, but the economically disadvantaged spouse needs assistance to adjust to the economic consequences of a divorce.

Therefore, the Wife’s alimony obligation was ultimately modified to $1,200 per month for five years.

Hatfield v. Hatfield, No. M2012-00358-COA-R3-CV, Tennessee Court of Appeals, Middle Section, February 7, 2013.

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