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Separate Property in a Colorado Divorce

In the United States, there are two methods of dividing marital property in a divorce: equitable distribution and community property. Like the majority of states, Colorado is an “equitable distribution” state, which means marital property is divided in a manner that is fair considering the couple’s circumstances, which does not necessarily mean “equal.”

Ideally, couples will reach an agreement about property and debt division among themselves with the assistance of their respective attorneys, but if a couple cannot reach such an agreement, a judge will have to decide for them based on a number of factors, such as the length of the marriage, the age, and health of the parties, the income and assets of each spouse, each spouse’s earning capacity, and so on.

Marital vs. Separate Property

In all states, including Colorado, only marital property is divided in a divorce unless a prenuptial or postnuptial agreement says otherwise. In the absence of such an agreement, separate property is not subject to division in a divorce.

What is marital property? Marital property consists of all income and assets acquired during the course of a marriage. It doesn’t matter who earned the income or whose name is on the title, it is considered marital property and it’s subject to division.

Separate property, on the other hand, is not divided in a Colorado divorce. Separate property includes assets acquired before the marriage, gifts, and inheritances, even if they were received during the marriage. Separate property also includes purchases made with separate property. For example, if a wife received a gift of $20,000 from her grandmother after she won the lottery and the wife bought an ATV with the money, the ATV would belong to the wife alone as long as she avoided comingling the funds before the purchase.

Commingling Separate Property

It’s not uncommon for spouses to commingle separate property with marital property. They may combine separate assets with marital assets intentionally, or because they are careless and do not realize what they’re doing. For example, a spouse may have a bank account from before the marriage, but it becomes marital property when their spouse deposits their earnings into the bank account.

Or, if one spouse owned a home before the marriage, it can become marital property if their spouse pays the mortgage and other housing-related expenses. When separate property is “comingled,” it can get complicated, so this is one situation where an attorney’s services come in very handy.

To learn more about property division in a Colorado divorce, contact Kaplan Law L.L.C.