Marital Property Division: Community Property vs. Equitable Distribution

Are you involved in a Colorado divorce or family law proceeding involving divorce or dissolution of marriage? An experienced Colorado Springs, divorce attorney can guide you through the legal process and assist you in exploring your options. You have one bite at the apple in the court system so make it count.

When couples divorce, how their assets are divided depends on which type of property division system their state follows. There are two primary approaches – community property and equitable distribution.

Community Property States: Nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) follow community property principles, under which assets acquired during marriage are generally owned equally (50/50) by both spouses. Equitable Distribution States: The remaining states, including Colorado, follow equitable distribution principles, under which marital assets are divided fairly—but not necessarily equally—based on multiple factors.

Janko Family Law practice observation – Even in Colorado, which is an equitable distribution state, Courts tend to favor as equal of a distribution as possible absent compelling reasons for an unequal distribution. It is difficult for a party to argue on appeal that an equal division is not fair.

Colorado creates a fundamental distinction between marital property (subject to division) and separate property (set apart to the spouse who owns it). However, the appreciation of marital property during the marriage is martial property which makes most separate property mixed property. Additionally, there is a presumption that separate property subsequently titled as joint property becomes marital property.

Marital property includes all property acquired by either spouse during the marriage, regardless of whose name is on the asset or title. C.R.S. 14-10-113. The presumption applies even when:

• Only one spouse's name appears on the title
• The property is held in joint tenancy, tenancy in common, or other co-ownership form
• One spouse earned all the income used to purchase the asset – keep in mind that income earned during the marriage is marital income regardless of which party actually earned the income.

Separate property is not subject to division and includes:

• Property owned before marriage;
• Property acquired by gift, bequest, devise, or descent to one party during the marriage;
• Property acquired in exchange for separate property (if properly traced);
• Property acquired after a decree of legal separation; and
• Property excluded by valid prenuptial or postnuptial agreement

A spouse claiming that property is separate has the burden of proof. To successfully claim separate ownership the spouse must trace the property back to the original separate asset. If separate property becomes so commingled with marital assets that it cannot be traced, it loses its separate property status

Janko Family Law case observation: When tracing property, every movement that the funds made must be shown through documents showing the movement. This tends to be difficult to understand for clients who think that the separate property nature should be obvious.

Colorado law presumes that gifts from one spouse to another during the marriage are marital property, not separate property. C.R.S. 14-10-113. This presumption can be overcome only by clear and convincing evidence. C.R.S. 14-10-113. For example, if during the marriage one spouse transfers title to a vacation home into joint names, there is a presumption that the home is marital property.

Once property is classified as marital, Colorado law requires the court to divide it equitably - meaning fairly, not necessarily equally. C.R.S. 14-10-113.

Colorado courts follow a two-step process:

• Determine whether each asset is marital or separate.
• Value marital property as of the decree date or the hearing date if earlier.
• Set apart separate property to the owning spouse C.R.S. 14-10-113

• Divide marital property in just proportions after considering all relevant factors C.R.S. 14-10-113.

Colorado law requires courts to consider all relevant factors, including:

• Each spouse's contribution to acquiring marital property, including the contribution of a homemaker. C.R.S. 14-10-113
• The value of property set apart to each spouse C.R.S. 14-10-113
• The economic circumstances of each spouse at the time division becomes effective. C.R.S. 14-10-113

Marital misconduct, other than some forms of economic misconduct and more recently domestic abuse, are not relevant to dissolution of marriage because Colorado is a no-fault dissolution of marriage state. C.R.S. 14-10-113.

Because the party claiming separate ownership bears the burden of proof, maintain clear records of:

• Date of marriage account statements and property valuations
• Gift letters and inheritance documents
• Tracing documentation showing exchanges of separate property
• Prenuptial or postnuptial agreements

Avoid commingling separate and marital funds in the same account. Once separate funds become untraceable, they may be treated as marital property

Turning Change Into Opportunity in Colorado Springs Divorce and Child Custody

A highly knowledgeable and experienced Colorado Springs divorce attorney can guide you through Colorado Springs divorce and child custody matters by negotiating, mediating and litigating on your behalf. You can focus on moving to a better future instead of spending your time attempting to navigate complex legal rules and procedures.

Sabra Janko from Janko Family Law has more than 20 years of legal experience and has written “the book” on Colorado divorce and family law – “Colorado Family Law With Forms”, published by LexisNexis, which you can find at here. Contact us at 719-344-5523 or complete our online scheduling request for a free 30-minute informational consultation. We also offer paid advice sessions for a more in-depth analysis of your case.