Colorado is “no fault” divorce state. “No fault” means that you do not have to prove to the Court that your marriage was broken by someone’s bad behavior. Instead, in Colorado, one party simply has to assert that the marriage is irretrievably broken. When one party makes this assertion, the Court will make a finding that the same is true.
One exception to the “no fault” nature of Colorado divorce law is the legal concept of “economic fault”. Economic fault occurs when one spouse wastes or dissipates marital assets or unreasonably incurs marital debts, generally in contemplation of divorce. In In Re. Marriage of Hunt, the Supreme Court held that economic fault is a limited concept that comes into play in only extreme cases. An example of economic fault would be if a person intentionally ran their business into the ground, in anticipation of divorce, or if a person incurred many thousands of dollars of debt and if that debt did not benefit the family unit in any way (i.e. an expensive vacation with a new significant other).
Specifically, in In re. Marriage of Jorgenson, the Colorado Court of Appeals held that economic fault occurred when Husband had concealed, transferred, and withdrew martial assets in contemplation of divorce and in violation of the automatic injunction that took effect when the divorce was filed. The Court adopted the Supreme Court’s holding that economic fault can only be found in extreme cases. Id.
What does the dissipation of assets look like, or when does incurring debt give rise to a claim for economic fault?
When a divorce begins, household expenses tend to rise. If you and your spouse are no longer living together, your family may now be paying for the costs associated with running two households, rather than just one. One or both of you may have chosen to hire attorneys, you’re figuring out how to shop for groceries for one less person, and you may suddenly find yourselves needing childcare, whereas you did not need to pay for childcare before you separated. This sort of increase in expenses is not indicative of the dissipation of marital assets that would give rise to a claim of economic fault.
Economic fault generally entails a spouse intentionally using or neglecting an asset with the intent of depriving the other spouse of that asset when a divorce is likely to occur or is already in the process or incurring significant debt that did not benefit the marital unit. The Court may also find that economic fault took place over the course of a marriage if one spouse used martial assets for non-martial purposes.
The argument for economic fault is not an easy argument to make in court. The burden is on the person claiming that the court should make a finding of economic fault to prove that the circumstances are as “extreme” as those contemplated by the Court in Hunt and Jorgenson.
So, what does the court do if they make a finding of economic fault? The court may consider economic fault when determining how to divide the property of the spouses in an equitable manner. For example, if the Court finds that one person intentionally reduced the value of a home (by destroying it, causing significant damage to it, or failing to maintain it as they historically had), the Court may then treat that value of the home as though it was in pristine condition.
If you have a claim for economic fault, you will need to speak with an attorney, as this is a complex legal argument to make to the Court. At GEM Family Law, our seasoned attorneys can help guide you through the process and determine how best to make your claim. If you have questions about a family law matter that you’d like assistance with, call GEM Family Law for a free consultation today at 720-443-4892.
Authored by: Kristin Day Weaver, J.D. Candidate 2019