One of the first questions asked by people considering a Colorado divorce is, how is marital property divided? Property division can be one of the most challenging and frustrating components of a Colorado divorce. Therefore, it is essential to understand the basic principles behind Colorado property division when facing a potential divorce.
Marital Property in Colorado
In Colorado, there are two types of property the court addresses during a divorce. These are marital property and separate property. Marital Property is property acquired by either spouse during the marriage. In the event of a divorce, the court attempts to divide marital property equitably.
Marital property includes nearly anything of value. Examples of marital property include the following:
- Real estate;
- Bank accounts;
- Retirement accounts;
- Personal property; and
- Household goods.
When marital property is divided, it is divided based on its value at the time of the divorce unless the spouses agree otherwise. Marital debt is also considered and allotted between the spouses.
Separate Property in Colorado
Property brought into the marriage by either spouse is separate property and generally remains separate property so long as it is separately titled.
A spouse’s separate property includes:
- Property one spouse receives during the marriage by gift or inheritance;
- Property acquired in exchange for separate property;
- Property a spouse acquires after a legal separation; or
- Property excluded from the marriage by a valid legal document.
If a spouse invests or exchanges their separate property, it will remain separate property so long as these exchanges are traceable. This can prove very difficult with constant reinvestment. However, the appreciation from a separate property asset is considered marital property as well.
If separate property is titled in both spouses’ names jointly, then there is a presumption that the spouse who originally had the separate property intended to make the property a gift to the marital estate.
Separate property can be a very confusing and complicated matter in a divorce. Marital and separate property can end up “co-mingled” or mixed together. This may or may not be intentional. If the spouses are unable to decide how to divide co-mingled property, the court will decide the most equitable division.
Valuing Marital Assets in Colorado
After determining which assets are marital, a value must be placed on those assets. There are a variety of ways to ascertain the value of assets. See my article on ways to find values for property in Evidence Without Experts: Property Issues, ABA Family Advocate, Fall 2013.
Professional appraisers are often hired to value real estate, antiques, or other personal property. CPA’s can do business valuations. Values for assets such as bank accounts and retirement or investment accounts can be found on monthly or quarterly statements.
Often the equity in the marital home is the largest marital asset. Couples usually divide home equity in one of three ways. They might sell the home and divide the net proceeds. One spouse may refinance the home and pay the other spouse their share of the equity. One spouse may stay in the home for a specified time period, often if there are children in the home, then the home is sold and the equity divided or one spouse pays the other their share of the equity.
Pensions and retirement accounts are also marital assets available for division. However, dividing these benefits can result in tax consequences. It is best to consult with a tax attorney or accountant before deciding how to divide these benefits.
Equitable Property Division in Colorado
The court’s division of marital property is not necessarily equal. Instead it seeks to be equitable, or fair. The court considers a variety of factors when determining what a “fair” division of marital property entails. These factors include:
- Each spouse’s contribution to the acquisition of the property, including contributions as a homemaker;
- Value of property set aside to each spouse;
- Economic circumstances of each spouse at the time of the division, including the desirability of awarding the family home to the spouse caring for the parties’ children; and
- Increases or decreases in the value of separate property during the marriage, or depletion of separate property for marital purposes.
In general, the court divides marital property without regard to the bad behavior of either spouse. But, if the court finds that one spouse improperly used marital property for non-marital purposes, the court may award the other spouse an offset in the amount of the wrongly used marital property.
Marital debts are also allocated equitably in Colorado. This can result in an unequal allocation, where the higher income earner assumes a greater responsibility or one where the party who incurred the debt incurs a greater responsibility.
Secure Your Colorado Property Division Rights
Securing your Colorado property division rights today has a direct impact on your future goals. Contact an experienced Colorado divorce attorney to protect your separate property and to ensure you receive your fair share of the marital assets.
No two situations are alike, and the attorneys at Perusse Family Law, PLLC, are available to assist you throughout the complexities of your divorce.