Colorado Divorce Laws Explained
Divorce laws in Colorado are based on the principle of equitable distribution. What this means is that when spouses divorce, their marital property will be divided equally and fairly. The court handling the divorce will divide the marital property based on the couple’s needs and the financial circumstances of each person. Important factors the court will consider when determining the division of assets and debts include the length of the marriage, each spouse’s economic situation, contribution that each spouse made to the marital property (including homemaking), and the awards the spouses are likely to receive from retirement funds or health insurance policies.
Specific rules about the equitable distribution of property only apply after a court issues a decree of dissolution of marriage. In those cases, all marital property is subject to equitable distribution. Marital property includes both the income acquired by each spouse during the marriage and the assets acquired during the marriage. The court will determine whether each property is marital property or exempt property. Exempt property includes the following:
Marital property includes income earned by the spouses during the marriage , property acquired during the marriage which is not exempt property, and debt that was incurred during the marriage. Generally, however, premarital property and nonmarital property will remain as such after a divorce decree. The income generated by nonmarital property may also be marital property if one of the spouses commingles separate and nonmarital property with marital property or fails to keep the property separate during the marriage. Marital property also includes increase in value of nonmarital property as well as property that one spouse gifted or devised to the other spouse during the marriage.
In Colorado, divorces are based on neither party being "at fault". While fault normally applies to the grounds of the divorce, the grounds for divorce in Colorado include only irreconcilable differences. Parties don’t have to separate or live apart for any period of time before they can file for divorce. Courts will consider the fault of the parties only when deciding issues of maintenance, property division and child custody.
Colorado Property Distribution
During the course of a divorce, Colorado law requires the trial court to divide all marital property and debts acquired by the parties during the marriage. There is no such thing as equitable distribution in a community property state. In those states, all property acquired during marriage was owned equally by both parties, and upon dissolution of the marriage, it was simply divided equally. Community property states are few and far between these days.
In Colorado, the division of property is referred to as equitable distribution. Equitable distribution, in layman’s terms, means just what it says, an equitable distribution. However, the terms "equitable" or "equitable division" mean something very specific in Colorado. If the parties cannot agree on the division of property, they present the issue to the court for determination. The court is required to decide the percentage of the marital assets to be awarded to each party. There are many factors the court may consider in dividing the property. The court may even award the marital property to the party that does not have the children full-time. For example, it is not unusual if one parent has the children full-time, that the other parent will be required to pay child support. In that instance, the court may treat child support and property division as interrelated, thus distributing more property to the party who is responsible for the children full-time.
The Difference Between Marital And Separate Property
In Colorado, determining what constitutes marital property and what is separate property is an essential aspect of divorce law. A person cannot waive their right to property that belongs to them. Colorado law defines and distinguishes between marital and separate property with the intent of fairly dividing one spouse’s assets from the other spouse’s assets and liabilities.
The general rule in Colorado is that all property acquired during a marriage is marital property, but property acquired before the marriage or property the parties agree to be separate is separate property. The acquisition date is not necessarily the same as the date the actual funds were received in the event of a home, for example.
Keep in mind that co-mingling of assets can change the character of the asset. Co-mingling occurs when funds from the marital account are used to purchase something that was intended to be separate property. For example, you put $10,000 of your premarital funds into an account resulting from the closing of a house. After the sale of the house, you apply $10,000 of funds from this account toward the purchase of a car. Because you put money from the sale of a jointly held asset into a jointly held asset, you have co-mingled funds.
In Colorado, marital property includes most current income, assets acquired during the marriage or either spouse’s debts with at least one of the following exceptions:
Here are some examples of separate property: Note the exceptions: In Colorado, with rare exceptions, nonmarital property will automatically be converted to marital property if commingled with marital property in a way that it can’t be identified as nonmarital any longer. If you deposit your premarital funds into a joint checking account, it may not be enough to show it was "commingled" unless there is evidence of agreement to make it a joint account, or if the funds are inseparable from those earned during the marriage. You may want to keep a record of which account your wages were deposited into during the marriage.
If you transfer property to another spouse during your marriage in "contemplation of divorce" and without fair consideration, and without a valid reason other than separating assets, such as getting out of debt, courts will likely find that the transfer is void and that it will revert to its original owner.
Considerations That Affect Property Division
Both economic and non-economic factors are taken into account when assessing property division in Colorado. A judge considers the circumstances of both parties and of the marriage overall. Significant, but not necessarily controlling, factors that may impact property division include: The length of the marriage is a major factor that weighs favorably for equal division. The idea is that the longer the marriage, the less justification there is to believe the marital partners should own disparate assets. In light of that, Colorado law assumes that a shorter marriage diminishes the requirement that the marital estate be split evenly. The economic circumstances of the parties at the time of distribution are considered, including how long it might take them to find employment. The goal is to provide all adults with the age, education and experience to make a living. The opinion also evaluates how the property allocation assists with economic self-sufficiency. The source of the property divides between separate, marital and commingled property. Separate property belongs to one person whereas marital property belongs to both parties. If an asset was acquired during the marriage or with joint efforts, it belongs to the marital estate and shall be divided. Commingled property is when separate property becomes part of the marital estate. How each party contributed to the marital estate is viewed carefully. It is important to demonstrate whether there was real value added by the contributions, whether financial or in the form of physical labor or resources. Examples of contributions include: Making homemaking or child care sacrifices rather than pursuing a career Providing additional support to the family, including financial and physical Assuming individually the majority of the responsibilities for raising and caring for children Engaging in business pursuits and sharing those earnings with the family The ruling may consider debts that were accrued jointly and what would be the equitable division of debt. How much revenue came from the debt may figure into the division. For example, if a couple bought a house to share, the debt assessment and division may take into account that they sold the property for a gain and will perhaps share some of the equity in the home.
Keeping Your Assets Safe
As a divorce approaches or during the early stages of a divorce, there are various immediate actions that a party can take to protect his or her marital or separate non-marital property. Colorado is a true "equitable distribution" state. The court is to divide the marital estate according to "equity." This does not mean equal because equity means judging by what is fair in each case given the circumstances of the parties. However, the court cannot distribute separate non-marital property of a party to the other party. Non-marital property is not part of the marital estate and is not the subject of any orders regarding distribution. The property is not subject to distribution simply because a divorce has occurred. At the time of the decree of dissolution, the marital estate is valued and distributed to the parties. If it can be clearly shown that the owner of the appliance contributed a specific amount of money to the purchase of the appliance required that the appliance is clearly non-marital. Other examples are a gift to one party or an inheritance to one party.
During a divorce, the parties are often tempted to put marital funds into a joint account in order to hide what assets the parties have available to them. This is risky as if the other party can show that the joint account was opened with the intent to shield the funds , the deposit into the joint account can be reviewed. The goal is to get a ruling from the court that the account should be considered "marital" and should be subject to equitable distribution. That is because asset distribution in Colorado considers the non-marital assets of the parties. If the non-marital asset fails to be disclosed as such, the court will not consider the actual amount of non-marital assets that the party has available to make an equitable distribution. Further, distribution of a marital asset to the other spouse as an offset during distribution of marital property may negate the need to consider non-marital assets. For example, an asset that will be distributed to the other party may in a divorce be of more value than the actual amount of funds or property that the party has. Under these circumstances, the court will go too far and look at the non-marital estate of the party receiving less, which in this case may not need to be looked at. In the case where the party with the less value seeks to distribute as an offset to the marital estate, the other party will seek to have the unequally distributed marital assets be considered non-marital as the party with the lesser assets seeks to create an offset. Ideally, to the extent possible, the assets that are distributed to the party with less value should be rough compensating for the marital estate.
Importance Of Mediation And Settlements
Discussions during the mediation process or in settlement negotiations between attorneys can often be the most effective way to expedite a divorce and minimize litigation. In these contexts, clients are able to reduce litigation costs and preserve their relationships, and thereby make transitions easier for themselves and their families.
Collaborative divorce is similar to mediation in that it seeks to resolve a divorce by agreement, rather than going to court. Collaboration does not involve the same level of confidentiality as mediation and is less costly. Parties will usually each have their own attorney to assist in the process and represent them in mediation or other settlement negotiations. The parties may decide to retain joint experts to evaluate property and custody concerns or other issues.
Many divorcing couples are able to save thousands of dollars in legal costs in a mediated or collaborative divorce. The collaborative process takes longer than a typical negotiated settlement because the parties cannot go to court as the process is based on problem solving and trust. Divorcing couples sign a contract which prevents them from going to court and requires them to make full disclosure.
However, using mediation and collaboration, equitable division of property is usually achieved in a fairly short period of time in a low-stress environment. If spouses are able to reach agreement through these processes, the normally significant costs of drafting the settlement documents and appearing in court to have the court approve the agreement can be minimized. Many divorced clients have expressed that avoiding the adversarial, protracted nature of divorce litigation was worth more than the money they saved.
Sources Of Legal Help
Understanding Colorado’s divorce and property division laws, including the rules in Equitable Distribution of Property and Allocation of Assets and Maintenance of Assets and Liabilities in Divorce or Separation, can be quite difficult. There are also exceptions to these laws covering the distribution of special types of property such as retirement accounts. If you are seeking a divorce, you should consult with a knowledgeable and experienced divorce attorney about your options for dividing property in Colorado. Your divorce attorney can help you understand your rights under Colorado law and how best to protect those rights so that you are treated fairly in the marital property division process. Fortunately for divorcing couples in Colorado, there are a number of resources available to help you find qualified divorce attorneys. The Colorado Continuing Legal Education has an interactive online service at www.colegalnet.org that allows you to find lawyers in your area based on the areas of Colorado divorce law in which they practice. In addition , you can review the lawyers’ backgrounds before making a selection. Alternatively, a lawyer referral service can match you with a qualified Colorado divorce attorney who can provide you with valuable information about Colorado’s divorce and asset division laws. The Colorado Bar Association provides a resource for finding divorce attorneys in Colorado based on your zip code. They can also provide you with other information related to divorce. There are a lot of things to consider when you are going through a divorce and even more if you are trying to divide marital property in Colorado. A divorce attorney can provide invaluable assistance throughout the process; however, you need to contact a qualified lawyer as soon as possible to make sure that you are fully protected under the law.