Have you ever heard, “What’s mine is mine and what’s yours is mine?” or “What’s yours is mine and what’s mine is my own?” Although stated differently, the result is that one person prevails and the other is left holding the bag. Thankfully, Colorado law has a less juvenile way to determine separate and marital property. 

This blog examines marital and separate property in Colorado and what happens when separate property is commingled with marital property. We examine Social Security, retirement accounts and gifts acquired during marriage. 

What Is Marital Property in Colorado?

Marital property is legally defined as “any property which either spouse acquires during their marriage, except for property acquired by gift, inheritance or property excluded by a prenuptial agreement,” See § 14-10-113(2), C.R.S.

The practical application is that marital property is subject to division, either by the courts or as agreed to in mediation. In Colorado, marital property must be divided equitably. Note that equitable does not mean “equal” division – it means “fair” division. 

To do this, a mediator or a judge will take into account the separate property each spouse owns when determining how to equitably divide the marital property. If one spouse owned an apartment complex before the marriage and rents it out and the other spouse only has a 15 year old car as their separate property, this would be one factor when a judge or mediator weighs in on how to divvy up the marital property. 

Other factors are each spouse’s earning capacity, their health issues, and who will have primary parenting responsibilities. 

What is Separate Property in Colorado? 

Separate property is property that acquired before marriage and treated as separate during the marriage. Treating it separately means you opened an account or invested in an asset where you are the only owner, and it is not commingled with other money or assets that are jointly owned. The main question is whether you retained the separate character of the property or gift during the marriage? Did you make deposits into this account during your marriage? Were these deposits your paycheck only? Is the property deeded to you? Are you the accountholder of the bank account? 

If you can show that your actions kept it separate, the property will be deemed separate and not subject to division. However, any appreciation on the separate property from the date of acquisition to the date of divorce is considered marital and goes into the marital pot to be divided.

What if We Commingled Our Separate Property? 

Think about it like this. You have your own separate property. But if you use it to buy something that benefits your marriage – you’ve commingled the two and it is now subject to equitable division.

A few common examples of commingling property:

-You inherit money and deposit that money into a joint account with your spouse, the inheritance becomes marital property.

- If you have an investment account or start an investment account and both spouse’s incomes contribute to the account, the funds in that account become marital property.

- If a relative dies and leaves you $50,000, and you use that money to pay down the mortgage on the home you both live in, that “gift” transforms into marital property. You may try to argue that the $50,000 was meant to be a gift only to you, but unless your soon-to-be ex feels generous, they still get their half of it.  Bottom line, if you wanted to keep it characterized as a gift, you should have deposited it into a new separate bank account in your name only. There are many other waysto avoid commingling that you should look at before making any purchase. 

Are Retirement Accounts Separate Property? 

Contrary to popular belief, no. If the account was created, added to or increased in value during the marriage, it is considered marital property, either completely or in part, and subject to division.

Are Social Security Benefits Separate Property? 

Yes. Colorado law says Social Security benefits are not subject to division, nor can they be offset by providing your spouse with a greater portion of the marital property. But there’s an exception. If the marriage has lasted 10 years or more and the claimant spouse is 62 or older, the former spouse can receive benefits on the claimant spouse’s record.

This makes sense when you consider that you’ve been paying into Social Security since you began working and the Social Security Act, § 407 specifically, prohibits the assignment of Social Security benefits in any other legal process. In 1975, Congress amended the Act to include § 659, which incorporates a narrow exception to the anti-assignment provision to enforce legal obligations to provide child support or alimony. 

We have established marital and separate property and how each is treated depending on the circumstances. Whether your property division occurs inside the courtroom walls, an attorney’s office, or with a mediator, the same ground rules apply. 

The Certified Divorce Financial Analysts at the Divorce Resource Centre of Colorado are uniquely suited to assist divorcing couples. We are here to learn more about your unique situation during a 20 min exploratory call that you can schedule here

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