Divorce is a life-altering event that brings emotional, financial, and legal challenges.
In Tennessee, a state with unique divorce laws rooted in equitable distribution, the fate of the family home depends on several factors, including the classification of property, financial circumstances, child custody arrangements, and the preferences of both spouses.
For guidance through the legal process, practical considerations, and strategies for keeping the family home, contact an experienced divorce attorney. I serve residents in Memphis, Tennessee, and throughout Shelby County, Tennessee.
Tennessee is an equitable distribution state, meaning that marital property is divided in a manner deemed fair and just, though not necessarily equal. The family home, often the couple’s most valuable asset, is subject to this division process. To determine whether you can keep the family home, it’s essential to understand how Tennessee courts classify and distribute property.
The first step in determining the fate of the family home is classifying it as marital property or separate property:
Marital property: Assets acquired during the marriage, regardless of whose name is on the title, are generally considered marital property. This includes the family home if it was purchased after the marriage, even if only one spouse’s name appears on the deed or mortgage.
Separate property: Assets owned before the marriage, inherited, or gifted to one spouse individually are considered separate property. If one spouse owned the home prior to the marriage and kept it in their name, it may be classified as separate property, though complications arise if marital funds were used to maintain or improve it.
In many cases, the family home is marital property because it was purchased during the marriage. However, if one spouse contributed separate funds (e.g., an inheritance) to the purchase or upkeep, they may argue for a larger share of the home’s value, a concept known as commingling or transmutation.
Once the home is classified as marital property, Tennessee courts consider several factors to divide it equitably, as outlined in Tennessee Code Annotated § 36-4-121(c). These include:
Duration of the marriage: Longer marriages may result in a more even split of assets, while shorter marriages might favor the spouse who contributed more financially.
Age, health, and earning capacity: If one spouse has limited earning potential due to age, disability, or lack of job skills, the court may award them the home to assure financial stability.
Contributions to the marriage: This includes both financial contributions (e.g., paying the mortgage) and non-financial contributions (e.g., homemaking or child-rearing).
Custodial arrangements: If children are involved, courts prioritize their stability, often favoring the custodial parent to remain in the family home.
Economic circumstances: The court assesses each spouse’s financial situation, including income, debts, and ability to maintain the home.
Tax consequences: Keeping the home may have tax implications, such as property taxes or capital gains taxes if sold later.
Other assets and liabilities: The home’s value is weighed against other marital assets, such as retirement accounts or vehicles, to achieve a fair division.
These factors guide judges in contested divorces, but many couples negotiate their own agreements through mediation or collaborative divorce, giving them more control over the outcome. For guidance through this process, reach out to an experienced divorce attorney.
When deciding what happens to the family home, couples typically face three main options: one spouse keeps the home, the home is sold, or co-ownership continues temporarily. Each option has legal, financial, and emotional implications.
Keeping the family home is often a priority for spouses, especially those with children who want to maintain stability. However, retaining the home requires careful planning to make sure it’s financially feasible. Here’s how this option works in Tennessee:
Buyout: The spouse who wants to keep the home may “buy out” the other spouse’s share of the equity.
For example, if the home is worth $400,000 with a $200,000 mortgage, the equity is $200,000. The spouse keeping the home would owe the other $100,000 (assuming a 50/50 split). This payment can be made in cash, by refinancing the mortgage, or by offsetting other marital assets.
Refinancing: If the home has an existing mortgage, the spouse keeping it must refinance to remove the other spouse’s name from the loan. This requires sufficient income and creditworthiness, which can be challenging for a newly single individual.
Spousal support or child support adjustments: In some cases, the court may adjust alimony or child support to help the custodial parent afford the home, especially if it’s in the children’s best interest.
Court award: In contested cases, the court may award the home to one spouse based on equitable distribution factors, such as the need to provide a stable environment for children or one spouse’s inability to secure alternative housing.
Challenges:
Affordability: Maintaining a home on a single income can be difficult, especially with ongoing costs like mortgage payments, property taxes, insurance, and maintenance.
Debt responsibility: If the mortgage isn’t refinanced, both spouses remain liable for the debt, even if only one lives in the home, creating potential conflicts if payments are missed.
Emotional attachment: Staying in the home may evoke painful memories, making it harder to move forward post-divorce.
If neither spouse can afford to keep the home or both prefer a clean break, selling the home and dividing the proceeds is a common solution. In Tennessee:
Process: The couple agrees (or the court orders) to list the home for sale. After paying off the mortgage and closing costs, the remaining proceeds are divided according to the equitable distribution agreement.
Benefits:
Provides a fresh start for both spouses with no ongoing financial ties.
Liquidates a major asset, making it easier to divide funds equitably.
Eliminates the burden of homeownership costs for either party.
Drawbacks:
Selling can disrupt children’s lives, especially if they must relocate or change schools.
Market conditions may affect the sale price, reducing the proceeds.
Capital gains taxes may apply if the home’s value has appreciated significantly (though exclusions exist for primary residences under IRS rules).
In some cases, spouses agree to co-own the home temporarily, often to delay disruption for children until they graduate or reach a certain age. This arrangement is less common but can work under specific circumstances:
How it works: Both spouses retain ownership, but typically, one (usually the custodial parent) lives in the home. They may share mortgage payments, or one spouse can cover costs with an agreement to settle the equity later.
Legal agreements: A detailed co-ownership agreement is essential to outline responsibilities, timelines, and what happens when the home is eventually sold or one spouse buys out the other.
Challenges:
Requires ongoing cooperation, which can be strained post-divorce.
Ties both spouses financially, limiting their ability to move on.
May delay inevitable decisions about the home’s future.
Several unique aspects of Tennessee law and practical realities influence whether you can keep the family home after divorce.
Tennessee courts prioritize the best interests of the child when making decisions about custody and property division. If one parent is awarded primary residential custody, courts often lean toward allowing that parent to remain in the family home to minimize disruption. For example:
A custodial parent with limited income may be awarded the home, with the other spouse receiving other assets to balance the division.
The court may order temporary arrangements, such as allowing the custodial parent to stay in the home until the children reach adulthood, at which point the home is sold.
Tennessee recognizes several types of spousal support (alimony), including alimony in futuro (long-term), rehabilitative alimony, transitional alimony, and alimony in solido (lump-sum). The type and amount of alimony can affect whether a spouse can afford to keep the home:
Alimony in futuro: Long-term support may provide the income needed to cover mortgage payments and upkeep.
Rehabilitative alimony: Temporary support might help a spouse transition to homeownership while they gain job skills or education.
Alimony in solido: A lump-sum payment could fund a buyout of the other spouse’s share.
Tennessee offers homestead exemptions that protect a portion of the home’s value from creditors, which may be relevant if one spouse faces financial difficulties post-divorce. Additionally, property taxes in Tennessee vary by county, and the spouse keeping the home must budget for these costs.
For example, in 2025, Shelby County’s property tax rate is approximately $4.06 per $100 of assessed value, while Davidson County’s is around $3.29.
Tennessee encourages mediation and collaborative divorce to resolve property disputes amicably. These processes allow couples to negotiate creative solutions, such as one spouse keeping the home in exchange for other concessions.
Mediation is often faster, less expensive, and less adversarial than litigation, making it a popular choice for deciding the fate of the family home.
If your goal is to keep the family home after a divorce in Tennessee, consider the following steps:
Assess Your finances:
Calculate your income, including wages, alimony, and child support.
Estimate ongoing homeownership costs: mortgage, taxes, insurance, utilities, and maintenance.
Determine if you qualify for refinancing based on your credit score and debt-to-income ratio.
Get a home appraisal:
Hire a professional appraiser to determine the home’s current market value. This is critical for calculating equity and negotiating a buyout.
Explore buyout options:
Discuss with your spouse whether they’re willing to accept a buyout in cash, assets, or a combination.
Consult a financial advisor to explore funding sources, such as savings, loans, or retirement accounts (though withdrawing from retirement accounts may incur penalties).
Consult an attorney:
Hire an experienced Tennessee divorce attorney to traverse property division laws and protect your interests.
Make sure all agreements, especially buyouts or co-ownership, are documented in a legally binding divorce decree.
Plan for children:
If you have children, emphasize their need for stability when negotiating with your spouse or presenting your case to the court.
Work with a family law attorney to align custody arrangements with your goal of keeping the home.
Consider emotional factors:
Reflect on whether staying in the home aligns with your long-term emotional and financial well-being. Sometimes, letting go is the healthier choice.
Working with an experienced divorce attorney and assessing your finances can make the division of assets in your divorce easier.
Keeping the family home after a divorce in Tennessee is possible but requires careful consideration of legal, financial, and emotional factors. For personalized guidance, consult an experienced divorce attorney, like me, Theresa D. Childress, who can tailor strategies to your situation. I serve clients in the Memphis, Tennessee, area and throughout Shelby County, including Lenox, Nonconnah, Germantown, Bartlett, Arlington, Millington, and beyond. Contact me today.
Divorce is a life-altering event that brings emotional, financial, and legal challenges. In Tennessee, a state with unique divorce laws rooted in equitable distribution, the fate of the family home depends on several factors, including the classification of property, financial circumstances, child custody arrangements, and the preferences of both spouses.
Divorce can be emotionally draining, but the financial aspects often bring their own set of challenges. One of the most complicated financial issues in a divorce is the division of retirement accounts. Whether you have a 401(k), pension, or IRA, understanding how these assets are divided is crucial.
