One of the most challenging elements of some divorce processes is the division of property. There is no federal approach to this process. Each state tackles the matter differently. Some take a community property approach, in which all property is considered to be jointly owned by the couple. Other states have a more nuanced way to divide marital and separate assets. It’s vital to work with an experienced family attorney in Denver to understand how these components apply to your particular divorce case.
Let’s take a closer look at this issue. Is Colorado a community property state and what should you know about division of property?
The Short Answer
So, is Colorado a community property state? No, it isn’t. Instead, the state legislation is directed toward an equal division of marital assets through a system known as equitable distribution. This doesn’t necessarily mean that the amount of total assets each party receives following the divorce will be entirely equal. Instead, the courts will aim to reach a division that is considered fair within the definitions of the law.
Therefore, an equitable distribution should be approached as a way to ensure neither party is substantially worse off than the other. In the best case scenarios, parties will reach a mutual agreement on what items are applicable for division and what a fair proportion of these is.
Unfortunately, divorces aren’t always amicable. Indeed, alongside division of custody, the equitable distribution of assets is one of the most common reasons for the divorce process to become delayed. This is why it is so important to collaborate with an experienced Denver divorce lawyer who can guide you through both identifying the appropriate assets for division and representing your claims.
What is Considered Marital Property?
In general, marital property refers to assets acquired during the course of the marriage. Though, in some instances, it may also include property that you both voluntarily commingled before you got married. For instance, if you opened a joint bank account or signed a joint lease for a vehicle.
It’s important to understand that various types of property can be considered marital in nature. Some of the common elements include:
Bank accounts
Any checking or savings accounts opened during the course of the marriage can be considered marital property and therefore subject to division. This doesn’t just apply to the obvious joint bank accounts. Individual bank accounts that you each place your individual salaries into can still be considered joint property. Indeed, some portions of bank accounts that you opened prior to the marriage can be considered joint property, based on funds accrued during the marriage itself. It’s also worth noting that accounts relating to debt — credit card accounts, for instance — are also considered marital property. Therefore, the debt contained in these can be divided equitably, too.
Investments
All assets that are investments gained during the marriage can be considered marital property for the purposes of division. This can be traditional forms of investment, such as stocks and bonds. It can also include the equity or income produced as a result of investment real estate. The division will not just apply to the value of the investment asset itself, but also to the equity gained. You should also note that even if you invested prior to the marriage, the interest or equity gained during the course of the marriage can be subject to division. Even something as seemingly innocuous as purchasing a classic car before you met your spouse can see the additional value gained being included in the divorce settlement.
Personal Property
Any personal property gained during the course of your marriage can be part of the equitable division of assets. In many cases, couples come to a mutual agreement on the smaller items, such as less expensive furniture and electronics. However, in particularly acrimonious divorces or high net-worth cases that may involve antiques and so forth, a more thorough and formal accounting of these items will take place. The value of these items will then be part of the division process.
Businesses
It often comes as a surprise that businesses can be part of the equitable distribution of assets. After all, if you’re an entrepreneur, your business is likely to be the product of your hard work, talents, and sacrifices. However, as with any other marital asset, the courts consider your partner to have played a direct or indirect part in your success. Division here may take a couple of forms. Both spouses may be given a meaningful stake of the business itself. It is also common for the business to be valued and for the other spouse to receive in-kind value in other assets.
What is Considered Separate Property?
Naturally, not all assets are considered marital in nature. The definitions can get complex, so having an experienced Denver divorce lawyer in your corner can help you to best represent your case to retain sole ownership of an asset or to argue for your right to a share of what may traditionally be considered your former spouse’s property. In most cases, separate property falls into one of two categories:
Assets acquired prior to the marriage
In simple cases, any assets purchased or otherwise gained prior to your marriage will be considered separate property. Therefore, it is not subject to valuation and division between you and your former spouse. Nevertheless, the courts may consider the ratio of separate property each spouse has when deciding on what the most equitable distribution of the marital property is likely to be. As previously mentioned, while the separate property itself may be excluded, any equity gained on these items during the marriage will be considered marital property.
Inherited or gifted assets
Assets a party receives as a gift or inheritance are generally not subject to division. However, it’s important to note that the terms of the transfer of ownership must unambiguously name the recipient as the sole owner. A potential exception to this is if a party receives funds as an inheritance or gift and purposely places them in a joint marital bank account. This may be considered a transmutation of property, which sees the intentional commingling of the asset as allowing it to be considered a marital asset.
What Factors are Considered?
As Colorado is not a community property state, alongside the total value of marital and separate property, the equitable distribution of assets involves some other considerations. Your attorney in Denver will help you to understand the application of each of these in your case and help you to gain the fairest division on the basis of such factors. Some of theses factors include:
Individual contributions
The courts take into account how each spouse contributes to the joint acquisition of assets. This doesn’t mean that if one party is the primary material breadwinner that they will gain the most assets as a result of their contribution. Activities as a homemaker and other forms of contribution are considered, too. The contribution to depletion of assets will also be considered. For instance, if a spouse’s intentional behavior results in an investment being worth less, this can be taken into account.
Economic circumstances
The independent economic circumstances of each party will help to determine what constitutes equal division of assets. One spouse should not be left destitute while the other enjoys the bulk of the property. This factor also comes into play in conjunction with custody arrangements. The main custodial parent may be awarded property to ensure the children’s lives aren’t disrupted by being forced to move out of the family home.
Utilizing Experienced Legal Professionals
Colorado is not a community property state. This means the equitable distribution of assets can be a quite complex matter. It’s important to work alongside an experienced Denver divorce lawyer to ensure you get fair representation in these matters. Hulse Law Firm provides clients with the guidance and knowledge needed to navigate the nuances of the Colorado family court system. Feel free to reach out to us with any questions you have about the equitable distribution of assets during your divorce.
