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Employment Not a Substantial Contribution to Household Enterprise

Keyt v. Keyt, 244 S.W.3d 321 (Tenn. 2007)

Employment Not a Substantial Contribution to Household Enterprise

The husband and spouse on this 2007 case had been married in 1988.  The spouse didn’t work exterior the house, and the husband was employed by a trucking firm based by his father.  The husband had been employed by this agency previous to the wedding, and earlier than the wedding, his dad and mom had applied an property plan.  Below this plan, the husband acquired items within the type of money or inventory.  These distributions started about 4 years earlier than the wedding.  The annual items had been valued beneath the property plan at $20,000 per 12 months, with the total worth of the husband’s inventory was set at about $250,000, representing about 14% of the corporate.

These shares, nevertheless, got here with restrictions.  The husband had no voting privileges, and had no capacity to promote or encumber the inventory.  In 2002, the corporate was bought, and the husband’s share of the proceeds was about $2.5 million, though the worth after sure indemnities was pegged at about $1.3 million.

The trial court docket set the appreciation at simply over $1 million, and held that this quantity was marital property.  The husband appealed, and the case was finally heard by the Tennessee Supreme Court docket.  The excessive court docket famous that will increase within the worth of separate property are marital property provided that each events “considerably contributed” to the appreciation.

The husband argued that the court docket needn’t even attain the difficulty of whether or not the spouse contributed.  Since each spouses should considerably contribute, he argued that he himself made no substantial contribution, and that his contributions to the corporate had been merely these of an worker.

The Supreme Court docket famous that the husband “had no involvement in buying new clients, in figuring out delivery routes, or in deciding what gear to buy and the place to construct new terminals.”  The court docket distinguished the case from Clement v. Clement, No. W2003-02388-COA-R3-CV (Tenn. Ct. App. Dec. 30, 2004), wherein the husband had taken a really energetic position within the administration of the corporate.

For the reason that husband made no “substantial contribution” to the rise in worth, the excessive court docket held that the appreciation was his separate property, and reversed the decrease court docket.

This publish is a part of a sequence, Appreciation of Separate Property: The Forensic Accountant’s Full Employment Act.

To study extra, go to When Professionals Divorce in Tennessee: Valuing Professional Practices.

 

 

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