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Reviewed by Elizabeth Fendley Birch
You may assume it will be difficult for you to look back at the gifts you received throughout your marriage, as they may serve as a constant reminder of your past life and the ultimate breakdown of your relationship with your spouse. However, you may still want to hold onto them to eventually pass on to your children, who will appreciate and cherish them more. Or, to sell and get sufficient funds to support you as you become financially independent for the first time in a long time. At any rate, please follow along to find out how gifts are distributed in a Tennessee divorce and how one of the proficient Clarksville property division lawyers at Fendley and Birch can help you keep what you desire most.
First of all, Tennessee is an equitable distribution state, which orders the family courts to divide marital property fairly and justly between two spouses in the event of their divorce.
Under TN Code § 36-4-121(b)(2)(A), marital property includes all real and personal property obtained during the marriage by either or both spouses. It’s important to understand that marital property can include both tangible and intangible assets, and will include all property, regardless of who technically owns it. So, a marital gift might be when a family member purchases a gift from the couple’s registry and gives it to them on their wedding day.
Separate property is defined at § 36-4-121(b)(4), and timing is only part of the test. Separate property generally covers any assets obtained before the marriage. Critically for gifts, subsection (b)(4)(D) makes separate property of anything a spouse acquires at any time by gift, bequest, devise, or descent. A gift given to one spouse during the marriage is separate property because of who received it, not because of when.
For example, one spouse’s parents may have gifted them with an automobile after their graduation, getting their first job, or another milestone made before even meeting their partner, and they may have only put their name on the title. Or, separate property may also be property acquired during the marriage but only addressed to one spouse. A common example of this may be when one spouse gifts another spouse luxury jewelry, handbags, or clothing on their wedding anniversary, birthday, or any other celebrated holiday.
So, generally speaking, gifts are more likely to be considered separate property in a divorce proceeding. But your spouse may make every effort to have it count as marital property. That is, they may argue that it “commingled” with your marital property. Going back to the example mentioned above, they may argue that you used marital funds from your joint bank account to pay for the necessary repairs on the automobile gifted to you by your parents.
Under § 36-4-121(b)(2)(B)(i), marital property includes the income from and appreciation in the value of assets during the marriage of property that is otherwise separate so long as each party contributed substantially to the maintenance of and appreciation of the asset.
What constitutes a substantial contribution is broadly defined under § 36-4-121(b)(2)(D). This can include the direct or indirect contribution of a spouse as a homemaker, wage earner, parent, or even family financial manager. This means a spouse who never even touched the asset may still have contributed to it in the eyes of the court.
It’s important to understand that, even though a separate asset may not be subject to the division of assets, it will still be taken into consideration in accordance with § 36-4-121(c)(6). Essentially, the court must consider the value of each spouse’s separate assets when dividing marital property. Therefore, retaining a gift can have an impact on how the rest of the property is divided.
You should note, however, that under § 36-4-121(b)(2)(E), assets divided as marital property are not considered income for child support or alimony purposes, except to the extent the asset produces additional income after it is divided.
If you are the beneficiary of an estate plan, your inheritance is almost positively considered separate property and therefore cannot be subject to equitable distribution. However, to reiterate, you must do everything in your power to not “commingle” this separate inheritance with your marital property. For example, you must not deposit a cash inheritance into your joint bank account shared with your spouse. Or, you cannot use inherited funds to purchase a family home that you and your spouse primarily reside in with your children throughout your marriage.
Engagement rings given before the wedding fit within § 36-4-121(b)(4)(D) as property obtained by gift, so after the marriage occurs, the ring remains the recipient’s separate property and is not subject to the equitable distribution process.
A broken engagement, however, is a different matter, and one the property distribution statute does not answer. The courts in Tennessee generally treat engagement rings as a conditional gift given with the condition that the marriage occur, so the ring should be returnable if the marriage does not happen. However, that principle is derived from case law, not statute, so if you are navigating an engagement that was called off, the outcome ultimately depends on how the attorneys apply case law to your facts. An antenuptial agreement can also directly address the ring and how it should be handled.
All of this to say, the time to act is now. Please pick up the phone or message us at Fendley & Birch. Our dedicated legal team understands how complicated these matters can be to navigate, which is why we will do everything in our power to assist you during these difficult times. When you need help, do not hesitate to contact our experienced firm today.