Equitable Distribution of Marital Property

A large part of any divorce or separation agreement focuses on how the two parties will divide their assets and liabilities. This process can quickly become complicated and heated, especially as many people have misconceptions about what constitutes marital or separate property.

Understanding the division of assets and liabilities can help you set your expectations before divorce proceedings. Whether you undergo an amicable divorce or plan to litigate, understanding these basics enables you to achieve a successful resolution.

Classifying Marital and Separate Property

When dividing assets and debts, the law focuses on property obtained during the marriage and excludes any assets or liabilities that the spouse had before the marriage. Colorado law has clear guidelines about what constitutes marital and separate property and which of these undergo division during a divorce or legal separation.

What Is Marital Property?

Marital property includes any asset or debt acquired during the marriage, regardless of who holds the title or financing. This means that even if an asset, such as a home, was purchased during the marriage and is listed solely in your name, it is still considered marital property. As a result, it could be subject to division in the event of a divorce, making it crucial to understand how these assets are categorized and managed.

Incorporating tools like a will and trust into your estate planning can help protect your interests and ensure that your assets are distributed according to your wishes. Additionally, premarital agreements can outline how marital property should be handled, providing clarity and preventing potential disputes. It’s also essential to establish a medical power of attorney to ensure that your healthcare decisions are respected, particularly if your marital status changes. These steps provide a comprehensive approach to protecting your assets and ensuring your intentions are honored, both during the marriage and beyond.

Keep in mind a couple of exceptions to this rule, which relate to how the couple acquired the property. These exceptions include:

• Acquisition by gift, inheritance, or bequest
• Acquisition by exchange of another property that isn’t marital property
• Acquisition by a spouse after legal separation
• Valid agreement by both parties to exclude the property

It’s important to note that “property” doesn’t refer to just houses; it includes all assets and debts. Most people also do not understand that they have to divide debts as well as assets, regardless of who took out the debt and who holds the debt. If either spouse obtained the debt during the marriage, then it becomes a part of the marital property.

Separate property is any property that a spouse owned or purchased before the marriage. However, any increase in value to this property after the marriage becomes part of the marital property. This rule applies to any assets, including retirement accounts, investments, 401k, and pensions, in addition to physical assets.

Co-Mingling

Co-mingling occurs when a spouse mixes their separate property into the marital funds. The most common example is if a spouse sells a home they owned prior to the marriage and puts those funds down as a deposit for a new marital property.

Properties that have been co-mingled are considered gifts to the marital fund and will be subject to the same rules as marital property when dividing assets.

Community Property

Community property is a principle whereby all property owned by both spouses before the marriage gets counted as marital property. Colorado makes a clear definition between marital and separate property and will only divide property obtained during the course of the marriage.

What Does Division of Assets & Liabilities | Equitable Distribution of Marital Assets Mean?

When it comes to distributing marital assets, the keyword is “equitable.” Equitable distribution aims to divide the marital property in a fair and just manner to both parties. It doesn’t mean an even 50/50 split, which would simplify matters but would be unfair to at least one party in most cases.

You need to remember that only marital assets and liabilities become subject to division under equitable distribution law, while separate property that belongs to one individual isn’t included.

Factors Impacting the Distribution of Marital Property

Equitable distribution takes into account various economic and financial factors before distributing marital assets. Some of the most important factors include:

• The financial contribution of each spouse to the property
• Economic circumstances of each spouse at the time of the distribution
• The increases or decreases of separate property values during the marriage
• Spousal contributions as a homemaker

If necessary, the court can order the sale or liquidation of any marital property to facilitate the distribution of marital property. It can also order an independent valuation of the property to ensure equitable distribution.

Division of Assets and Liabilities | Equitable Distribution of Marital Property

Every individual has their own idea of what constitutes an equitable distribution, leading to increased tensions during the division process. That’s why you need to work with a marital property lawyer who has your best interests in mind. We provide compassionate, understanding, and dedicated representation to help you achieve a fair and mutually beneficial outcome during the distribution of marital property.

The process can often feel complex, overwhelming, and stressful, and it’s a relief knowing that you have someone you can trust on your side. If you need help with your equitable distribution of marital property, please contact us at 303-832-4200 to schedule an initial consultation.