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Division of Property in a ...

house split in half

Colorado is an equitable distribution of property state, meaning that the property division must be done “equitably” or “fairly,” which does not necessarily mean “equally.” The division of property occurs by agreement of the parties or by the court at the Permanent Orders Hearing.

Division of Property Generally

C.R.S. § 14-10-113 provides that in a dissolution of marriage (or legal separation), the court is required to equitably divide (“in such proportions as the court deems just”) all marital property, without regard to marital misconduct. This means that the court cannot consider any wrongdoing such as adultery, lying, or domestic violence. Instead, the court can consider any and all relevant factors, including:

  • Contribution of a spouse to the acquisition of the marital property;
  • Contribution of a spouse as a homemaker;
  • The value of any property that has been set aside to each spouse (as their separate property);
  • The economic circumstances of both spouses at the time of the property division;
  • Any increases or decreases in value of separate property during the marriage; and
  • Depletion of separate property of a spouse for marital purposes.

The courts have great latitude and discretion in determining what is fair to both parties and how heavily to weigh each of the foregoing factors.

Marital vs. Separate Property

Marital property is generally defined as all property acquired by either spouse during the marriage, whereas separate property is generally defined as property that was acquired by either spouse prior to the marriage or was:

  • Acquired by gift, bequest, devise, or descent (e.g., an inheritance);
  • Acquired in exchange for a spouse’s separate property (e.g., replacement property);
  • Acquired after a decree of legal separation; or
  • Excluded by valid agreement of the parties (e.g., a prenuptial agreement).

As the court can only divide marital property, this distinction between marital and separate is important.

The statute further provides that any increases or appreciation in value of a spouse’s separate property that occur during the marriage is considered marital property. For example, let’s say one spouse has an IRA that is owned prior to the marriage, and it was worth $20,000.00 on the date of marriage. At the time of divorce, the IRA has increased in worth to $100,000.00. The initial $20,000.00 is that party’s separate property, but the $80,000.00 appreciation is marital property (subject to some complex legal arguments).

There is a general rule that all property is presumed to be marital and that the party asserting that property is separate has the burden of proving it is separate. This is important because if a spouse is not careful during the marriage, separate property may lose that characterization. This can happen if a party co-mingles the separate property with marital property (for example, depositing marital assets into a separate property bank account or adding the other spouse’s name to the separate account). A spouse may also transmute separate property to marital property, by, for example, purchasing marital property utilizing separate property. Generally, where separate property is used for the joint purchase of property, there is a presumption of a gift to the marriage, and thereby the creation of marital property, which can only be rebutted by clear and convincing evidence to the contrary.

The division of property can be the most difficult and complex part of any divorce case, and it is important to have competent legal representation to ensure that all assets and debts are properly valued and categorized as marital or separate property and that your interests are protected in the overall division.

To learn more, contact us online or call us at (720) 463-2232 to schedule a consultation.