Key Takeaways:
- Colorado is not a community property state; it follows an equitable distribution model where marital property is divided fairly, not automatically 50-50.
- Only marital property is divided in a Colorado divorce, while separate property (owned before marriage or received by gift or inheritance) generally remains with the original owner.
- Colorado requires mandatory financial disclosures in every divorce, so both spouses fully reveal income, assets, debts, and financial accounts before property division.
- Courts divide marital property based on fairness factors such as each spouse’s contributions, economic circumstances, and the value of separate property, not marital misconduct.
- Prenuptial and postnuptial agreements are valid in Colorado if properly drafted and can control property division, but they cannot decide child custody or support.
If you’ve never gone through a divorce, or you haven’t been divorced in the state of Colorado, you might not know much about the divorce process in Colorado. Understanding the divorce process is incredibly important when it comes to protecting yourself in a divorce. You might have even heard of terms like “community property” and wondered if they applied to your situation.
Divorce laws are state-specific. Colorado is not a community property state and instead uses the marital property model. All marital property in a divorce is divided equitably, not equally. This is based on multiple factors that a judge will analyze to ensure that each spouse is treated fairly when dividing assets and debts.
At Ascent Legal Group, our Colorado divorce lawyers are skilled at helping our clients navigate property division as part of the divorce process. We help our clients understand Colorado law so that they can make fully informed, strategic decisions about their divorce, which may include deciding to come to an agreement with their ex or taking their case to trial to protect their interests. Contact our law offices today to schedule a free consultation with an experienced Colorado divorce attorney.
What Does It Mean to Be a Community Property State?
When it comes to property division in a divorce, there are two main options: community property and marital property. The majority of states (41) are marital property states, including Colorado. Just 9 states follow the community property model (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin).
In a community property state, almost all assets that you earn or buy and any debt that you incur during a marriage are considered community property. This typically means that even if you bought something on your own or if you took out a loan in your own name, you and your spouse own the asset or owe the debt equally.
While the specific rules vary by state, in a community property state, all assets are split equally in a divorce. This may include everything from savings and retirement accounts to real estate to income earned while married to personal property (like cars). It also includes any debts that were acquired during the marriage.
The 50-50 split can seem incredibly unfair, particularly if one spouse has to give up half of their savings to the other. However, these laws can protect a spouse who might have been a stay-at-home parent or who relied on their partner financially.
Colorado is a marital property state, not a community property state. Understanding how property division works in a Colorado divorce is critical to protecting your interests. Read on to learn more about the process and the options that you have when it comes to your marriage and divorce.
How Property Division Works in a Colorado Divorce
In Colorado, all assets and debts between 2 spouses are characterized as either marital property or separate property. In a divorce, only marital property is subject to property division.
This marital property will be divided equitably, not equally – a major difference from community property states.
Financial Disclosures
When you file for divorce in Colorado, each party must file a mandatory financial disclosure. You must disclose various assets and debts to your soon-to-be ex, regardless of whether you are getting a contested or uncontested divorce. You are required to disclose the following documents to your spouse (if applicable):
- Income tax returns for the most recent 3 years;
- Personal financial statements for the most recent 3 years;
- Business financial statements for the last 3 years;
- Real estate documents (such as appraisals and title);
- Personal debt, like loans and credit card statements;
- Investments;
- Employment benefits;
- Retirement plans;
- Bank and financial institution accounts;
- Documentation of income;
- Childcare documentation (related to employment and education);
- Insurance documents; and/or
- Any documents related to extraordinary expenses related to minor children.
The purpose of these disclosures is to ensure that both parties know exactly what assets and debts their spouse has. After all, it is difficult to do an equitable distribution of property if one spouse is hiding assets.
Marital vs. Separate Property
With all property appropriately disclosed, the next step is to determine whether each asset or debt is marital or separate property. Marital property includes most assets and debts that a couple acquired during marriage. Separate property is anything that a spouse owned before marriage, acquired during marriage by gift or inheritance, or purchased or exchanged for separate property.
There are some complexities that can arise when it comes to characterizing property as separate or marital. For example, the increase in value of separate property over the course of a marriage is considered marital property (think of the appreciation of a piece of real estate). Separate property can also be converted into marital property, such as by putting their spouse’s name on the title. Commingling – or mixing separate and marital property – can also turn separate property into marital property.
Determining what property is separate and what property is marital can be complicated and is very fact-specific. A Colorado divorce attorney can help you understand how your property is likely to be categorized. They can also advise you of steps that you can take before and during your marriage to protect your separate property.
Assessing Value
Once all property has been disclosed and characterized, each item will be assigned a monetary value. For some assets, such as a bank account, determining a value is relatively straightforward. Other assets are more complicated, such as certain compensation packages, real estate, or collectible items. Professional appraisers and other experts can be hired to determine the value of both marital and separate property. These values can be determined by the couple if they are working towards an agreement or can be assessed by the court.
Dividing Marital Property
In Colorado, all marital property is divided equitably. This does not mean that the property will be split equally. Instead, a judge will consider a variety of factors to determine how to apportion the property fairly. Misconduct (like cheating) is not a factor when it comes to property division in Colorado.
Instead, courts will analyze 4 factors to divide both assets and debts:
- Each spouse’s contribution to the acquisition of the property, including contributions as a homemaker;
- Value of property set aside to each spouse;
- Economic circumstances of each spouse at the time of the division, including the desirability of awarding the family home to the spouse caring for the parties’ children; and
- Increases or decreases in the value of separate property during the marriage, or depletion of separate property for marital purposes.
Most couples would prefer to make their own decisions about how to divide their property, rather than leave it up to the court. It is possible to come to an agreement about property division and other issues in your divorce (such as child custody). This can allow you to protect what is important to you and avoid the uncertainty, stress, and expense of going to trial.
If you have concerns about protecting your financial interests in a divorce, you might consider signing a prenuptial agreement (before marriage) or a postnuptial agreement (after marriage). These agreements are valid in Colorado as long as they meet certain requirements. A prenup or postnup should be:
- Written and signed;
- Made after a full financial disclosure of assets, liabilities, and income;
- Entered into voluntarily;
- Fair and reasonable at the time that it is enforced; and
- Consistent with public policy (i.e., it cannot contain invalid provisions, such as penalizing a spouse for initiating a divorce).
A prenup or postnup can address some financial issues, such as property division. However, it cannot be used to address child custody, support, or spousal maintenance (also known as alimony).
These types of agreements can be incredibly helpful when it comes to making sure that your rights related to property are outlined clearly. They can also save you money in a divorce, as it will reduce the need for litigation over property. An experienced Colorado Springs divorce lawyer can help you draft a legally compliant agreement before or after you get married.
Divorcing in Colorado? We Can Help.
One of the big things that many people fear when it comes to divorce is losing everything that they have worked hard to build over a lifetime. While divorce can be expensive, the benefits can easily outweigh the costs. Our Colorado divorce attorneys can shepherd you through the process, helping you understand your rights and options.
Ascent Legal Group offers top-notch legal representation for Colorado family law cases, including divorce. We work hard to protect our clients’ financial interests through skillful negotiation and (when necessary) aggressive litigation. To learn more or to schedule a free 30-minute consultation with a Colorado Springs divorce lawyer, give us a call at 719-256-0067 or fill out our online contact form.
