Denver Division Of Marital Property & Assets Lawyers | Dissolution, Pre-Nup, Debts & More
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The division of marital property in Colorado is generally a two step process:
First, it must be determined what constitutes marital property. Marital property usually consists of property acquired by either spouse during the marriage. Marital property usually does not include property acquired by gift or inheritance or excluded by a valid prenuptial agreement,
Division Of Marital Property
Second, once the marital property is defined and valued, the marital property must be divided equitably. However, equitably does not mean the property is divided 50-50. In determining the equitable division of property, the Court will look at all relevant factors including: (a) the contributions of each spouse; (b) the value of property set apart to each spouse; (c) the economic circumstances of each spouse; and (d) any increase, decrease or depletion in the value of any separate property during the marriage.
Complicating the process is the fact that all assets are not worth what they appear to be worth.
What if the marital property of a couple equals $800,000 and consists of:
Family home with $200,000 in equity,
Ski-condo with $200,000 in equity,
401K with a current market value of $200,000, and
Savings account with $200,000.
Which would you take and why? The answer to that question depends on a number of factors.
Do you have a steady income to pay your bills?
Do you need the money to live on immediately?
Can you afford to maintain the family home? If so, what if there are unexpected costs associated with maintaining the family home?
If you sell the family home, will there be any capital gain taxes to pay? If so, what will they be?
Can you sell the family home?
If you sell the home, can you qualify for a mortgage on your own?
What if you try to sell the home and find out it needs a new roof and $30,000 in repairs?
If you sell the ski-condo, will there be any capital gains to pay, and if so, how much? If you do not sell the ski-condo, will you be able to rent it out and cover the costs to maintain it?
If you take the 401K and need to the money to live on, will there be an early withdrawal penalty? Will you have to pay income tax on the amount withdrawn? If so, how much is the penalty and what is the tax bill? Many people fail to realize, until it is too late, that if they cash out their 401K, it might only be worth ½ of its market value after penalties and taxes are paid.
Personal Business Interests
If either you or your spouse owns a business, it can get even more complicated. When a business is involved, the parties usually need to hire an expert to determine the value of the business. Then, once the value of the business is determined, it can get even more difficult in determining how to divide the business.
Determine what Each Asset is Worth based on your Circumstances
The division of marital property can be complex and it usually takes an experienced lawyer to help you obtain a fair result. Therefore, before agreeing to any type of property settlement, make sure you have considered all factors that determine the value of each asset.
Dividing Marital Property – Gifts from Parents to Their Children.
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Division Of Marital Property
Separating your life from your spouse’s is not a simple process, but it doesn’t have to be a difficult one. Having someone to guide you through the process of a divorce or legal separation can make the transition much smoother. Here we discuss what marital property is, what is not marital property, and a court’s role in dividing up marital property. We’ll also discuss some of the common questions people have such as what you are allowed to do with your assets right before and right after filing for divorce.
What Is Marital Property?
When people think of the phrase “marital property” they often think of the assets they’ve acquired during the marriage; cars, a home, bank accounts, and other items that have value. However, this phrase also encompasses debts that were acquired during the marriage such as credit cards, personal loans, and student loans. This means that the credit card that is only in your name is both you and your spouse’s responsibility, as are the student loans that your spouse has. Deciding how to separate from each other’s lives is more than just dividing up the items that everyone wants, but also dividing up the items that no one wants.
You’ll hear this phrase a lot, and although it sounds similar to “equal” it does not necessarily mean that. Equitable means “fair,” and it is the guiding principle of the Court when dividing up marital property. The Court’s goal is to make sure that how the marital property is divided up is fair to both parties, and because the Court is not constrained by a requirement to divide everything equally this gives the judge a lot of options. For instance, a judge could give one party who makes more money most of the debt, but also most of the property to make up for the burden they put on that party.
This is important to consider when deciding whether to go to trial to settle. Although settlement almost always requires compromise by both sides, it is oftentimes the best option because it removes the uncertainty of what a judge might do with the property division. That being said, there are certainly times where your attorney will advise risking the uncertainty because the proposal from the opposing party is unreasonable and unlikely to be implemented by a judge.
Determining what is separate property can be somewhat complicated, but most commonly it is any property owned before the marriage. It can also include certain types of property acquired during the marriage such as gifts and inheritance. For instance, a house you owned before the marriage is your separate property, but so is that money you inherited after you were married. This is because both inheritance and gifts to you are separate property. However, separate property can be converted to marital property, and in addition to that it is your responsibility to prove that money or assets that you own are separate property. You will need to provide documentation of how you acquired the asset or money, and if you cannot the Court will consider it marital. Furthermore, if you comingle the separate property with marital property it can be construed as a gift to the marriage. This is a common debate amongst parties when someone asserts that an asset is separate property.
There are also scenarios in which an asset is comprised of both separate and marital interests. A common example of this is when a party sells a pre-marital home and uses the money to purchase a marital home. Unless intended as a gift (which as mentioned above may become an item of debate) then the money put into the marital home is separate property from the remainder of the asset. Another common scenario is that one party keeps their pre-marital home and rents it out. Although the asset’s value the day before the marriage is separate property, any increase in value over the course of the marriage is marital property. In the case of a home, this is most easily calculated by measuring the equity prior to and after the marriage. This means that an asset you owned before the marriage could be subject to sale because the court can divide any marital property.
What Are Your Options With Property Before And After A Petition For Dissolution Is Filed?
Once someone files for divorce and serves the other party, a temporary injunction is put in place, and both parties have an obligation to preserve the marital estate, amongst other obligations. This means you cannot recklessly spend money in a manner you did not do before filing, and you cannot dispose of marital assets without the approval of the judge. Essentially, you should continue living as you did before, and any large or unusual purchases should be put on hold until you’re officially divorced. If there is an immediate need for something out of the ordinary your attorney can guide you on the best course of action and perhaps negotiate a course of action with the opposing party.
What is not so obvious is what you can do before the divorce papers are served. Although it might seem like everything is fair game before someone is served with paperwork, that is not the case. In reality, if someone takes an action that only benefits them because they know or suspect that a divorce is coming the judge can account for that when dividing up the property. It is never advisable to dissipate marital assets in anticipation of a divorce.
Navigating The Waters
The division of marital property is not as simple as it may seem on the surface. Even if you and your spouse seem to agree on how to divide up your lives it is advisable to consult with an attorney to ensure that it is in accordance with Colorado law. The more diverse your marital estate is the more important it is to retain an attorney. If you are involved in or anticipate being involved in a divorce in the near future contact the attorneys at Divorce Matters® to discuss the best course of action in your particular case.
Commonly Asked Questions About Finances & Divorce
Will all possessions be divided equally during a divorce?
Colorado Is an “equitable distribution” state. The court defines “equitable” as “that which is fair, but not necessarily equal.” Thus, marital assets in Colorado are not necessarily divided evenly in a 50/50 ratio. Additionally, only marital assets will be divided, separate assets will be kept separate.
Am I responsible for my spouse’s debt?
You and your spouse are both responsible for any debt incurred during the course of your marriage, regardless of whose name the debt is in. However, it is possible to negotiate how debt is handled during the divorce process. Contact our law firm for more information.
Will divorce affect my Social Security benefits?
Divorce can affect the amount of Social Security benefits you receive during retirement. Generally, if the marriage lasted for more than 10 years, spouses may be entitled to receive their ex-spouse’s Social Security benefits. This is a complex area of the law, so contact our law firm to set up a review of your unique situation.
What is a QDRO in divorce?
A Qualified Domestic Relations Order (QDRO) is a detailed order used for dividing up a retirement plan during a divorce. Retirement plans that were either obtained during the marriage, or have increased in value during the marriage, are generally considered marital property and can be subject to a QDRO. QDRO’s are specifically needed when splitting up a 401K plan or most pensions (defined benefit plan). However, they are not generally needed for dividing up IRA’s or Roth IRA’s.
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