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How is Property Divided in a Colorado Divorce?


Legal Advocacy for Your Colorado Divorce

If you and your spouse are considering a divorce in Colorado, one of the main issues you will need to work through is property division. If you and your spouse can work together on a property division arrangement, you can remain in control of how assets and debts will be divided after your divorce. Otherwise, the matter will go to court for a judge to decide according to the rules of Colorado’s property division law. The more you know about property division in Colorado, the more you can protect your rights.

Colorado Is an Equitable Division State

Property division laws vary from state to state. Colorado law requires that division of property in divorce be “equitable and fair,” which means that it doesn’t necessarily have to be a 50/50 split. By contrast, community property states hold that all property accrued during a marriage is subject to a 50/50 distribution.

Couples have the option of deciding what is an equitable and fair division of property. If they cannot decide between themselves, a mediator or arbiter may help with the negotiation process. If these alternative dispute resolution tactics fail, the last option is litigation. A judge may consider the following factors when determining a fair and equitable distribution of property in Colorado:

  • The financial situation of each spouse
  • Any increase or decrease in shared property throughout the marriage
  • The desire the parent who receives custody to live in the family home
  • Any dissolution of separate property for the sake of the marriage

With these factors in mind, a judge will divide marital property based on what is fair for the specific circumstances. If one spouse makes substantially less than the other due to giving up a career to take care of the family, for example, the lesser-earning spouse may get to keep more of the couple’s marital property, such as a shared home. However, each case is unique.

Determining Separate and Marital Property

There are two main types of property according to Colorado law: marital and separate. A couple’s marital property will likely include all assets or debts that both parties accrue throughout the course of the marriage. This may include real estate, businesses, vehicles, collectibles, jewelry, art, bank accounts, investments, stocks and bonds, retirement savings, and more. The courts can divide marital property but cannot touch separate property.

Separate property, on the other hand, pertains to assets and debts a spouse owned before the marriage or acquired through inheritance. If separate property experiences an increase throughout the course of a marriage, this increase is marital property. There can be exceptions to these marital and separate property rules, assuming that a couple signs a prenuptial or postnuptial agreement. In this case, the couple will divide property in accordance with the terms of the marital agreement.

To make matters even more complicated, sometimes marital property and separate property can become mixed together, which is a concept called “commingling.” For example, a separate bank account may become marital property when the other spouse makes a deposit into it, or a separate inheritance may become marital property when the receiving spouse deposits it into a joint banking account. Assessing marital and separate property can be difficult and often becomes a point of contention in Colorado divorces, necessitating the assistance of a family law attorney.

Process of Dividing Property

Property division is a complicated aspect of any Colorado divorce case. Understanding what to expect from this process can help you and your family properly prepare for when it comes time to negotiate a settlement or go to trial. In a Colorado divorce proceeding, an attorney or judge will use the following basic formula to divide property between two spouses:

  • Assess the value of your property. After determining which assets and debts are marital property, the couple (or a judge, if a divorce results in litigation) will assign a monetary value to each article. This may require professional appraisals of real estate, business holdings and other assets.
  • The division process begins. If spouses choose to divide property among themselves, they can assign items to each party and make equalizing payments if one gets an asset that’s worth substantially more than the other. Additionally, they may mutually agree to liquidate assets and divide the proceeds. Still others choose to amicably continue to co-own property, but this is not always the best option.
  • Spouses must split marital debts as well as assets. This includes mortgages, car loans, credit card debts, and more.
  • If the spouses cannot compromise and agree on how to divide marital property, the case will go to trial. In this scenario, a judge will analyze the facts of the case and allocate property to either spouse based on what is fair or equitable.

Alternative Dispute Resolution Versus Litigation

If a divorcing couple cannot come to an amicable arrangement regarding division of property, they have two other options: alternative dispute resolution tactics such as mediation and litigation. Litigation is a last resort for couples oftentimes, since it involves court costs, additional attorney’s fees, and an outcome that neither spouse will like. Mediation is a preferable alternative to having a judge rule on your property division issue.

Mediation is a private meeting between you, your spouse, your attorneys (if desired) and a mediator. A mediator does not have the same capacity as a judge. The mediator cannot make a ruling on property division. Instead, the mediator is someone who is trained in conflict resolution, there to help you and your spouse compromise on property division and the other elements of your divorce case.

Another form of alternative dispute resolution is arbitration. Arbitration is similar to mediation in that it is private and does not take place in a courtroom. It also does not necessarily have to end in a ruling (binding vs. nonbinding arbitration). If mediation and arbitration fail, however, a divorcing couple may have no choice but to engage in litigation. You can increase the odds of successful alternative dispute resolution by hiring a lawyer to represent you during negotiations.

How Can an Attorney Help With Property Division?

Do not take property division lightly during a divorce case in Colorado. Just because Colorado is an equitable division state does not mean that a judge’s ruling on how to divide your marital assets and debts will be fair to you or match your desired arrangement. Once a judge makes a property division ruling, it is generally not possible to seek a modification of the order except in extenuating circumstances. This is why it is important to protect your rights and best interests with a divorce attorney from the very beginning of your case.

A family law attorney in Fort Collins will have the experience and resources to help you navigate Colorado’s legal system. Your attorney will fully understand the state’s divorce laws and property division issues. Your attorney can help you and your spouse divide marital assets and debts in a way that is fair for both of you. If a settlement cannot be achieved, your attorney can represent you at trial. Either way, an attorney can answer your legal questions and make sure that you have everything you need during this difficult time.

Property division in Colorado can become complicated and often requires the guidance of an experienced family law attorney. Talk to a divorce attorney about your legal options if you have further questions.

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