How Do Courts Decide Property Division Among Families?

When families separate, property division is one of the main discussion topics along with custody and parenting matters as each spouse starts to plan for a separate, self-sufficient life.

This makes it important to understand your rights and obligations under Colorado law when dividing property and debts.

Several states in the U.S. apply “community property” rules for property division but Colorado is an “equitable distribution” state. What exactly does that mean for you and your family when you separate?

How do Colorado courts divide property?

In equitable distribution states like Colorado, the courts divide property in an equitable or “fair” way. This means that marital property may not be split 50-50 down the middle as it is with the “community property” method of property division.

Instead, a couple must seek a fair agreement based on the contributions of each spouse to the marriage and the existing financial circumstances at the time of the marriage dissolution. If no agreement can be reached, the courts will decide for you based on all the information at hand.

It should be noted that a 50-50 split of marital property is often the fairest outcome even in equitable distribution states. However, depending on circumstances, it is also possible that the judge orders one party to use separate property to make the settlement fair to both spouses.

When the court issues a decree terminating the marriage, a judge will divide property based upon its value on the day of dissolution (not separation) unless the parties agree otherwise.

In light of the above, the first step in dividing family property in Colorado is generally to determine what is marital property (part of the “marital estate”) and what constitutes separate property.

What is considered marital property?

The marital estate usually consists of any property acquired during the marriage regardless of who holds title to it.

This includes:

•       Real estate 
•       Bank accounts
•       Investments such as stocks, mutual funds, etc.
•       Stock options
•       Retirement accounts such as IRA, 401(k), FERS, PERA, military retirement, etc.
•       Vehicles
•       Personal and household property 
•       Business(es)
•       Pets

Note that it also includes the increase in value of “separate” property during the marriage.

What is considered separate property?

For the purposes of property division in Colorado, “separate” property is any premarital property that a spouse owned before the marriage started.

Even if the original item is traded during the marriage, it may still count as separate property. So, if one spouse owned a car before the marriage and traded it in for a new one, the replacement car may still be considered separate property during the division process.

Separate property also includes any inheritance and certain gifts obtained during the marriage (except most gifts made between spouses). In addition, if there is a valid prenuptial or postnuptial agreement between the parties, certain property may be excluded from being deemed marital property. Almost everything else is part of the marital estate.

What factors do the courts consider with equitable division?

The Colorado courts are empowered to consider a variety of factors when determining a fair division of family property. This may result in a judge deviating from the normal 50-5f0 split of property.

These factors include

•       The contribution of each spouse to the acquisition of marital property
•       The contribution of each spouse to homemaking
•       The value of separate property for each spouse
•       The economic circumstances of each spouse at the time of the division
•       The ability of each spouse to earn a living
•       Which parent is caring for the children?
•       Increases or decreases in the value of separate property during the marriage
•       Depletion of separate property for marital purposes
•       Unnecessary depletion or wasting of marital assets by either party during the marriage

Complicating factors in property division

The division of property does not necessarily mean a physical division. The family car or family home cannot reasonably be divided into two equal parts.

The spouses – or a judge – must determine the value of all property and then work out a reasonable split. This entails full disclosure of financial details and property held during the “discovery” process between the two spouses.

Each spouse may be awarded an assigned percentage of personal property, assets, and debts by the judge and the couple can then negotiate how best to arrange the division – or a judge will decide that too.

Debts also need consideration during a divorce. Whether it is a mortgage, car loan, credit card or other debt, this is generally considered part of the marital estate and subject to equitable distribution laws.

With disputes about property division in Colorado, the courts will refer to Colorado Revised Statutes Sections 14-10-113: Disposition of (Marital) Property in Dissolution or Legal Separation.

Do you need help with property division in Colorado?

If you are based in Colorado and are experiencing difficulties with matters of property division, the lawyers at Colorado Legal Group can help.

Request a free case evaluation from one of our experienced attorneys or call us at 720-594-7360 to get started.