When facing a divorce, you deserve a clear understanding of what happens to your property. Colorado is an equitable distribution state, unlike a handful of states that follow a community property rule.
Under this system, the court divides marital assets and debts fairly, though fairness does not automatically mean a 50/50 split. The goal is a “just” outcome for both people, not simply a mathematical one.
What “equitable” means
Equitable distribution requires the court to look at many factors when determining a fair division. The judge will consider several important issues, including:
- The financial and nonfinancial contributions each spouse made to the marriage, including working in the home.
- The economic circumstances of each spouse when the property division takes effect.
- The total value of separate property awarded to each person.
The court uses these factors to achieve an outcome it believes is right for your specific situation.
Marital vs. separate property
The first step in any property division is sorting your assets into two categories. Marital property includes all assets acquired by either spouse during the marriage, which can consist of your family home, retirement savings accumulated while married and joint bank accounts.
Separate property is anything you owned before the marriage or received as a personal gift or inheritance during the marriage. Separate property itself is generally protected and remains yours. However, this is where things get complex.
The court considers any increase in value of separate property during the marriage (the “appreciation”) as marital property for the sole purpose of equitable division, but the original separate property asset remains separate.
Common points of conflict
Disentangling assets can become challenging, particularly in high-asset divorces. You need skilled attention to details in several areas, such as:
- Retirement accounts: Transferring the marital portion of ERISA-governed retirement accounts, such as 401(k)s and certain pensions, requires a qualified domestic relations order (QDRO). Other accounts, like IRAs and public pensions, require different legal transfer documents.
- Business valuation: Determining the actual market worth of a business started or grown while you were married is critical and requires a professional valuation.
- Commingled assets: It can be challenging to trace separate funds, like an inheritance, that you mixed into joint accounts or used to buy marital assets.
- Hidden assets: Identifying money or property that one spouse failed to disclose or attempted to hide from the division process.
The court finalizes property values as of the date of the decree of dissolution or as of the date of the hearing on disposition of property if the hearing precedes the date of the decree, meaning asset values may change throughout the divorce process.
Colorado’s complex financial rules require skilled legal guidance to protect your interests and help you achieve a truly equitable result.