In Colorado, marital property and debt are divided equitably. The term “equitable” means fair, not necessarily equal, and this is the area where much of the conflict arises in divorce. What one spouse thinks is fair may seem decidedly unfair to the other spouse. Colorado is a “no-fault” state – meaning that one spouse’s romantic peccadillos are not usually the source of an unequal division of property. However, the existence of separate property, use of marital funds for nonmarital purposes, and unequal contributions to the increase in value of the marital estate can all affect the division of property and debt.
All property acquired by either spouse subsequent to the marriage and prior to the entry of a Decree of Dissolution of Marriage or a Decree of Legal Separation is presumed to be marital property. When a party’s beneficial interest in property is acquired through gift, bequest, devise or descent, it will be characterized under Colorado law as separate property. Colorado courts do not have the ability to allocate an individual’s separate property to the other spouse. However, the increase in value of one party’s separate property is marital value under our statute and must be allocated in accordance with Colorado law. The burden of establishing the value of a spouse’s separate property interest is on the person claiming the separate property interest.
Where necessary, we may advise our clients to engage valuation experts to provide opinions on the value of separate and marital property. Such experts may include business valuation experts, trust valuation experts, real property appraisers, or appraisers of fine art, antiques, collectibles, automobiles, race horses, among others. The use of an expert to value certain assets can be very helpful to the court in making a determination regarding how best to equitably divide the marital estate.
In cases where there are substantial assets to be divided in the action, but low liquidity, it may be necessary to secure the equalizing payment over time. Promissory Notes, Deeds of Trust, and Charging Orders are some of the tools that may be used in cases where the parties do not have the present ability to equalize the marital estate but must sell some property in order to finalize the division of property.
Retirement assets, trusts, bonuses, executive compensation, real property and businesses are all subject to division in the marital estate, assuming that there is a marital component to these. Determining what portion of these assets is “marital”, determining the marital value, and finding a way to tease apart these assets is the key to most property division in divorce or legal separation.