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How Are Assets Divided in a Divorce in Colorado?

People often think everything is divided equally in a divorce, but the reality is more complicated than that. To understand how assets are divided in a Colorado divorce, we need to explore the legal framework, considerations, and steps involved in this process.

Legal Framework in Colorado

In Colorado, during a divorce, assets are divided fairly between spouses, following the principle of equitable distribution used in many states. This means that the court divides marital property fairly, but not necessarily equally, between spouses. Marital property includes assets acquired during the marriage, such as income, real estate, investments, and personal property. It’s important to note that equitable distribution doesn’t always result in a 50/50 split.

According to David Crum, CEO and Managing Attorney at Colorado Legal Group, “Colorado follows the equitable distribution model, which aims to achieve a fair division of assets based on various factors. It’s not always a straightforward 50/50 split.”

Steps Involved in Asset Division

  1. Classification of Assets: The first step in dividing assets is to classify them as either marital or separate property. For the most part, marital property refers to the assets you get during marriage, like money or objects. Separate property often refers to the stuff you had acquired before marriage. Kelsey Berkley, an attorney at Colorado Legal Group, explains, “We carefully assess each asset to determine its classification, considering factors such as when it was acquired and how it was used during the marriage.”
  2. Division and Distribution: Sorting assets comes first. Next, decide how to split them between spouses. While equitable distribution doesn’t guarantee an equal split, it aims to achieve a fair outcome based on various factors.Sara Bush, another attorney at Colorado Legal Group, highlights, “Courts consider factors such as each spouse’s financial contributions, non-financial contributions to the marriage, the duration of the marriage, and the standard of living established during the marriage.”

Considerations for Asset Division

In Colorado, as in other states, certain considerations can influence how assets are divided in a divorce:

  • Financial Contributions: Courts may consider each spouse’s financial contributions to the marriage, including income earned and financial investments made.
  • Non-Financial Contributions: Helping with caregiving or supporting a spouse’s career can also be considered when evaluating contributions.
  • Standard of Living: The lifestyle during marriage can affect how assets are split to ensure both spouses can keep a similar lifestyle after divorce.
  • Duration of Marriage: In longer marriages, dividing assets can be more complicated because spouses may have mixed their money and property.

Practical Steps for Asset Division

  • Close Joint Accounts: Closing joint bank accounts and opening individual accounts is a crucial step to separate finances.
  • Review Credit Report: Getting your credit report can help you find joint debts and accounts, making it easier to divide assets.
  • Address Investments and Retirement Accounts: Dividing investment and retirement accounts requires careful consideration of tax implications and asset valuation.
  • Determine Home Ownership: Deciding who keeps the marital home or if it should be sold requires careful conversation and possibly changing the mortgage.

It is important to note that these steps should be done after resolution with the help of your attorney.

Assets in Marriages that Often Go Highly Contested

During a divorce, items obtained during the marriage may be contested if they hold significant value or sentimental meaning. This can lead to disputes over ownership and division of assets. It is common for couples to disagree on how to divide property acquired during their marriage. This can prolong the divorce process and lead to additional stress and conflict. Some of these assets include:

Real Estate: Marital homes or investment properties often represent a substantial portion of a couple’s assets. Disputes may arise over property division and who retains ownership of the family home or how to divide investment properties.

Business Interests: Ownership stakes in businesses, whether they are small enterprises or large corporations, can lead to contentious negotiations. Valuing a business accurately and determining each spouse’s entitlement to its assets or future profits can be complex.

Retirement Accounts: Retirement assets, including pensions, 401(k) accounts, and IRAs, are often subject to division during divorce. Problems can come up when figuring out how much each spouse gets from retirement funds saved up over time.

Stocks and Investments: Stock portfolios, investment accounts, and other financial assets acquired during the marriage may require valuation and equitable distribution. Disagreements can occur over the allocation of specific stocks or investment strategies.

Digital Assets: In the digital age, couples may have important digital assets to think about when getting divorced. This can include cryptocurrency holdings, digital media libraries, online businesses, social media accounts, and domain names. Valuing and dividing these assets can be complex, especially if they generate income or have sentimental value.

Personal Property: Items such as artwork, jewelry, antiques, and collectibles may hold sentimental value or significant monetary worth. When it comes to determining ownership and division of personal property, disputes can often arise, particularly when there are disagreements over the value of each item. This can be a common issue in situations such as divorce, inheritance, or when roommates or partners are parting ways.

Arguments about personal belongings can get emotional. People may feel very connected to certain items or believe they deserve more of the property. The worth of items can be different for each person. This can cause disagreements on their value and how they should be split up.

Vehicles and Boats: Cars, motorcycles, boats, and other vehicles acquired during the marriage may be subject to division. Issues may arise regarding ownership, value, and ongoing expenses associated with maintaining these assets.

Retained Earnings: If one spouse owns a professional practice or earns significant income through their profession, the retained earnings or future income potential may be contested. Determining the marital portion of these earnings and how to divide them fairly can be challenging.

Intellectual Property: Patents, copyrights, trademarks, and other forms of intellectual property acquired during the marriage may have substantial value. Disputes may arise over the ownership and division of intellectual property rights.

Inheritance or Gifts: Assets received by one spouse through inheritance or as gifts during the marriage may be considered separate property. However, disputes may arise if these assets were commingled with marital assets, appreciated during the marriage, or used for the benefit of the marriage.

Debts and Liabilities: Debts incurred during the marriage, such as mortgages, loans, and credit card debt, are also subject to division. Disputes may arise over how to allocate responsibility for the repayment of debts.

Prenuptial and Postnuptial Agreements: Couples may have entered into prenuptial or postnuptial agreements outlining how assets will be divided in the event of divorce. These agreements can impact the division process by specifying which assets are considered separate or marital property and how they should be distributed. Enforcing the terms of these agreements requires careful review and interpretation of legal documents.

Prenuptial Agreements

A prenuptial agreement, often referred to as a prenup, is a contract entered into by two individuals before marriage. It allows them to define their respective rights and obligations regarding property, finances, and other issues in the event of divorce or death.

Legal Parameters for Prenuptial Agreements

  1. Full Financial Disclosure: Both parties must fully disclose their assets, liabilities, and income to each other before signing the prenup. Failure to disclose all relevant financial information could render the agreement invalid.
  2. Voluntary Agreement: Prenuptial agreements must be entered into voluntarily by both parties without any coercion, duress, or undue influence. Each party should have the opportunity to review the agreement with their own legal counsel before signing.
  3. Fair and Reasonable Terms: Courts may invalidate prenuptial agreements that are deemed unconscionable or unfairly favor one party over the other. The terms of the agreement should be fair and reasonable at the time of execution.

Example of Prenuptial Agreement

Consider a couple, John and Jane, who are planning to marry. Before the wedding, they decide to create a prenuptial agreement to protect their respective assets. In the prenup, they agree that any property acquired individually before the marriage will remain separate property, and they waive any rights to each other’s premarital assets in the event of divorce.

Postnuptial Agreements

A postnuptial agreement, also known as a postnup, is similar to a prenuptial agreement but is executed after the marriage has already taken place. It allows spouses to address financial matters and asset division retrospectively, providing a framework for handling these issues in the future.

Postnuptial agreements are not a precursor for divorce. They are not accepted if either partner is putting these in place with the intention to get divorced soon.

Legal Parameters for Postnuptial Agreements

  1. Full Financial Disclosure: Like prenuptial agreements, postnuptial agreements require full disclosure of assets, debts, and income by both spouses. Transparency is essential to ensure the validity of the agreement.
  2. Voluntary Agreement: Both parties must enter into the postnuptial agreement voluntarily and without coercion. Each spouse should have the opportunity to seek independent legal advice before signing.
  3. Fair and Reasonable Terms: Courts may scrutinize postnuptial agreements to ensure that the terms are fair and equitable to both parties. Agreements that are one-sided or heavily favor one spouse may be subject to challenge.

Example of Postnuptial Agreement

Suppose John and Jane have been married for several years and decide to create a postnuptial agreement to clarify their financial arrangements. In the postnup, they outline how their assets will be divided in the event of divorce and agree to waive certain rights to each other’s property. They also establish guidelines for spousal support and other financial matters.

Legal Parameters for Getting a Postnuptial Agreement

The legal requirements for obtaining a postnuptial agreement vary by jurisdiction, but generally include the following:

  1. Mutual Agreement: Both spouses must agree to create a postnuptial agreement and be willing to negotiate its terms.
  2. Written Document: The agreement must be in writing and signed by both parties to be legally enforceable.
  3. Legal Review: Each spouse should have the opportunity to review the agreement with their own legal counsel to ensure they understand its implications.
  4. Notarization: Some jurisdictions require postnuptial agreements to be notarized to validate their authenticity.
  5. Fairness Standard: The terms of the postnuptial agreement should be fair and reasonable to both parties at the time of execution.

What Is a Qualified Domestic Relations Order (QDRO)?

A Qualified Domestic Relations Order (QDRO) is a legal document that outlines the division of retirement plan benefits between divorcing spouses. It is used to establish and enforce the rights of an alternate payee, typically the former spouse, to receive a portion of the retirement benefits earned by the plan participant during the marriage.

Key Elements of a QDRO:

  • Identification of Plan: The QDRO must specify the retirement plan(s) covered by the order, including the name of the plan, the plan administrator, and any relevant account numbers.
  • Identification of Parties: The QDRO should identify both the plan participant (the individual who earned the retirement benefits) and the alternate payee (the former spouse who will receive a portion of the benefits).
  • Division of Benefits: It outlines the specific method for dividing the retirement benefits, such as a percentage allocation or a fixed dollar amount. The order may also specify the timeframe for distribution of benefits.
  • Payment Terms: The QDRO may detail how and when the alternate payee will receive their share of the retirement benefits, including whether payments will be made directly from the retirement plan or rolled over into another qualified retirement account.
  • Tax Considerations: It may address the tax implications of the distribution, including any applicable tax withholding requirements or tax treatment of the distributed benefits.

Importance of QDROs:

  • Legal Authorization: Without a QDRO, a retirement plan administrator typically cannot distribute benefits to anyone other than the plan participant. The QDRO provides the necessary legal authorization for the division of benefits.
  • Enforcement: A QDRO is a court order that must be approved by the retirement plan administrator to be enforceable. Once approved, the plan administrator is obligated to comply with the terms of the order and distribute the benefits accordingly.
  • Protection of Rights: The QDRO ensures that the alternate payee receives their rightful share of the retirement benefits earned during the marriage, helping to protect their financial interests following divorce.


Consider a divorcing couple, John and Jane. During their marriage, John accumulated significant retirement savings in his employer-sponsored 401(k) plan. As part of the divorce settlement, Jane is entitled to receive 50% of the value of John’s 401(k) plan as of the date of their separation.

To facilitate the division of John’s retirement benefits, their attorneys draft a QDRO outlining the terms of the distribution. The QDRO specifies that Jane will receive 50% of the vested balance in John’s 401(k) plan, payable as a direct rollover into an individual retirement account (IRA) in her name. Once the QDRO is approved by the court and the plan administrator Jane will receive her share of the retirement benefits as outlined in the order.

Are You Entitled to Appreciation of a Separate Property?

One crucial aspect often debated in divorce proceedings is the appreciation of separate property. While the initial value of separate assets remains distinct, any appreciation during the marriage is generally considered marital property. Ron Taylor, an attorney at Colorado Legal Group, emphasizes, “Appreciation on separate assets can significantly influence asset division negotiations.”

For instance, if a stock account owned before marriage appreciates during the marriage, the appreciation is deemed marital property subject to division.

How Do You “Trace” Separate Property?

The process of “tracing” is vital in identifying the status of assets acquired before or during the marriage. Jon Wandersee, another attorney at Colorado Legal Group, explains, “Tracing involves documenting the flow of separate assets over time, especially when commingled with marital funds.”

For instance, if funds from a premarital stock account are used to purchase real estate during the marriage, tracing establishes the portion of the property attributable to separate assets.

Boosting Alimony & Support from Income on Separate Property

While separate property remains distinct, any income generated from separate assets during the marriage is considered marital property. This includes rental income from real estate or dividends from stock accounts. Understanding this distinction is crucial for equitable asset division.

Do Track with Assets and Debt Spreadsheets

Asset/debt spreadsheets play a crucial role in divorce negotiations and court proceedings. These documents detail the value of each asset, supporting documentation, and proposed allocation to each spouse. Ron Taylor highlights, “Spreadsheets streamline negotiations and provide a comprehensive overview of the marital estate.”

Hire a Colorado Attorney

Divorce can be emotionally and financially challenging, and navigating asset division in a Colorado divorce requires a comprehensive understanding of marital and separate property, as well as the unique complexities that may arise. This makes it essential to seek professional guidance. Attorneys specializing in family law, such as those at Colorado Legal Group, can provide valuable legal advice and representation throughout the divorce process.

As David Crum emphasizes, “Navigating asset division in a divorce requires expertise and a thorough understanding of Colorado’s legal framework. Our team is dedicated to helping clients achieve fair outcomes and move forward with their lives.” Contact our team if you are in need of help dividing your assets.

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