You and your spouse have made the decision to divorce. So what happens to your savings accounts, furnishings, and most importantly your home? In this blog post, we look at how property is divided in Colorado, what makes property subject to division and behaviors to avoid if your divorce mediation is underway.
Whether you are proceeding with an attorney assisted divorce or a divorce mediation, the ground rules for property division in Colorado are the same. Colorado follows the doctrine of equitable distribution when it comes to dividing marital property. Do not be fooled that because equitable and equal share the same first three letters, that the two words are interchangeable. It’s a bit more nuanced than that.
Equitable is not the same thing as equal but it doesn’t rule out that an equal division might sometimes be in order. An equitable solution is the solution based on what is just, fair, and right, in consideration of the facts and circumstances.
For example, if both parties to the marriage bought a sofa together and each person contributed $500 and both parties make roughly the same amount of money, what would be a way to make an equitable distribution? If they couldn’t come to an agreement about who gets to keep it, a judge or mediator may advise them to sell the couch and divide the proceeds equally.
In this instance, equitable worked out to be equal because each party was in relatively the same situation and contributed the same amount of money.
But, when you consider how rare it is that parties to a marriage will be on the same footing financially at that point, or into the future, it makes a lot more sense that Colorado uses a system of equitable distribution. Forty one states besides Colorado use equitable distribution while only Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are community property states. In community property states, there is equal division among the spouses.
In Colorado, equitable distribution means property will be divided by the court or divorce mediator in a manner that is deemed fair to both parties. Note: spouses are free to come to a decision on their own. You do not have to make the determination for all items deemed marital property before they leave the house or are sold. Couples who can agree about what to do with any given item, marital or separate, can make those decisions and not wait for a mediator or judge to decide.
To make a determination about what to do with marital property, a court or mediator looks at all the factors.
Common factors include, but are not limited to:
The property of couples divorcing in Colorado is deemed to be either marital or separate property. Separate property is property brought into the marriage by that spouse, and or Property they received during the marriage by gift or inheritance. Compare this to marital property that covers anything acquired after the marriage.
The main determining factor for marital property is, was the item bought, or the account opened before the marriage began? If yes, it’s deemed separate property. If not, it’s marital property. The date of marriage is what controls.
Even if you opened up a savings account at the bank in your name only and only you made deposits into it, it is still marital property if you opened it after you were married.
Where it gets a little tricky is when one party co-mingles their separate property with the marital property, which changes the nature of the separate property.
Below are a few ways that co-mingling money changes separate property to marital property:
It boils down to keeping meticulous records. If you want to make a purchase and make sure it remains separate property, then use funds out of an account with only your name on it and keep records about the funds used to make the purchase. Also, it is never a good idea to sell or give away any of your property while your divorce proceedings, including mediation, are underway. The way around this is to come to a mutual agreement, especially if one party, or both, desperately needs the money. However, it is best practices and will keep things running more smoothly if you don’t move money around and don’t buy any big ticket items during this time. Yes, we’ve heard the news that interest rates will begin to rise by the end of 2022 but that doesn’t exempt you to ignore the “no big purchases” rule of thumb.
Our roadmap to resolution breaks down our 8-12 week mediation process. Property division is part of step 2 of our 6 step process and only comes after clarifying your future financial situation, your goals and guiding principles. We can guide you in making the kind of property decisions that best suit your unique circumstances without the tension usually experienced in an attorney led process.
To find out more about our process, please schedule a complimentary 20 minute consultation’ with one of our experienced divorce mediators.