Which Assets Qualify as Marital Property in a Colorado Divorce?

When couples decide to part ways in Colorado, one of the most significant challenges they face is determining how to divide their assets and liabilities.

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Colorado is an “equitable distribution” state, which means that marital property is divided fairly, though not necessarily equally, between the spouses. To navigate this process effectively, it’s essential to understand what qualifies as marital or shared property under Colorado law.

What is Marital Property?

Marital property generally refers to all assets and debts acquired by either spouse during the marriage. Under Colorado law (C.R.S. § 14-10-113), this community property is subject to equitable division upon divorce.

In addition, the name on the title or ownership document does not necessarily determine whether an asset is marital or separate property. Instead, the timing and circumstances of the acquisition are key factors.

Examples of Marital Property

Common examples include:

  • Income Earned During the Marriage: Wages, salaries, bonuses, and other forms of income earned by either spouse during the marriage are typically considered as marital or shared property.
  • Real Estate Acquired During the Marriage: Homes, investment properties, and other real estate purchased while married are considered common, regardless of whose name is on the title.
  • Retirement Accounts and Pensions: Contributions made to retirement accounts such as 401(k)s, IRAs, or pensions during the marriage are generally deemed this type of property. This includes any growth or interest accrued on those contributions.
  • Business Interests: If a business was started or grew significantly during the marriage, the increase in value is often considered this type of property, even if only one spouse actively managed the business.
  • Vehicles: Cars, trucks, boats, and recreational vehicles purchased during the marriage are classified as marital or common property, regardless of who uses them or whose name is on the title.
  • Investment Accounts: Stocks, bonds, mutual funds, and other investment accounts acquired or funded during the marriage fall into the category of marital or common property.
  • Debts: Liabilities incurred during the marriage, such as credit card balances, loans, and mortgages, are also considered marital or common property and are subject to division.

Separate Property and Exceptions

Not all assets owned by spouses are classified as marital or common property. Some assets qualify as separate property and are excluded from division.

Separate property includes:

  • Assets Owned Before the Marriage: Property or assets acquired by either spouse before the marriage generally remain separate property.
  • Gifts and Inheritances: Assets received as gifts or inheritances by one spouse, even during the marriage, are typically considered separate property.
  • Assets Excluded by a Prenuptial or Postnuptial Agreement: If a valid marital agreement explicitly designates certain assets as separate property, they will not be subject to division.
  • Property Acquired After Legal Separation: Assets or debts acquired after the legal separation date are generally considered separate property.
  • Proceeds from Separate Property: If separate property generates income, such as rent from a property owned before the marriage, that income may also be deemed separate, provided it was not commingled with marital funds.

Commingling and Tracing

A significant complication in asset division during divorce arises when separate property becomes commingled with marital or common property. For example, if one spouse uses funds from an inheritance (separate property) to purchase a home in both spouses’ names, the property may be considered marital.

In such cases, a process called tracing is often used to identify and separate the marital and separate portions of the asset.

How Does Colorado Divide Marital Property?

Once marital and separate property have been identified, the court will divide the marital property equitably. Factors considered by the court include:

  • Each spouse’s contribution to the acquisition of marital or common property (including non-financial contributions such as homemaking).
  • The economic circumstances of each spouse at the time of the divorce.
  • The value of each spouse’s separate property.
  • Any increases or decreases in the value of separate property due to marital contributions.
  • Agreements between the spouses, such as prenuptial or postnuptial agreements.

It’s important to note that equitable distribution does not necessarily mean an equal 50/50 split. Instead, the division is based on fairness, which may result in one spouse receiving a larger share of the marital estate.

The Importance of Legal Guidance

Navigating the complexities of property division during divorce in Colorado requires a thorough understanding of state laws and an ability to analyze financial details. Working with an experienced divorce attorney can help you protect your rights and ensure a fair division of assets.

From identifying and valuing marital or shared property to advocating for your best interests, a skilled attorney can provide critical support during this challenging time.

If you’re facing a divorce in Colorado, understanding what qualifies as marital property is the first step toward achieving a fair resolution. With proper legal guidance, you can confidently approach the division of assets and move forward into the next chapter of your life.

 

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