Upon dissolution, it is necessary to agree to many aspects of separation with regards to the division of assets and debts. These provisions are embodied either in a separation agreement entered into consensually between the parties, or decided by the Court if parties do not agree. While the Colorado Courts website provides a basic separation agreement form, this form is for simple dissolutions and independent drafting is required for higher net worth dissolutions. A separation agreement is basically a contract between the parties. When both sign the agreement, it is enforceable as a contract and if issued as a court order it is then enforceable by the Court. The contract should be customized to each unique situation, though there are many commonalities and several required elements.
The first step is to identify all separate and marital property. All property must be disclosed in the course of negotiating the agreement. If there are any material omissions, a court can reopen the property settlement for up to two years after it is issued. Many people are surprised at the detail of financial disclosure required in dissolution. The philosophy behind financial disclosure is that both parties must be aware of all assets and debts in order to enter into a fair and equitable division of those assets and debts.Real Property
It is important to specify the location of real property and how title will be transferred if a home will go to one party rather than being sold. It is also important to identify any mortgages or liens against the property as those must be assumed by one party or satisfied upon sale. If one party will receive the home, then usually that party will refinance the home so the person losing an ownership interest will not continue to financially liable. Refinancing is not always possible, however. It is often wise to include a provision providing for sale of the home if the receiving party finds out that they can not refinance it.Retirement Accounts
Retirement accounts are often substantial assets. Either one party can keep the asset or it can be divided. Often professional valuations are required to calculate a present and future interest. Most attorneys do not value retirement plans because valuation is a specialized field and there are many different retirement plans. Valuations are subject to discretion and it is not uncommon to have differing valuation opinions. It is often necessary to have a Qualified Domestic Relations Order prepared to actually divide a retirement plan. Social security retirement benefits can not be divided between the parties.
Military retirement plans have special aspects as well because the disability portion of the benefits, if any, can not be divided. Whether there will be a disability portion often is not known at the time of division. Federal law also governs the division of military pensions.Cash Payments
Sometimes if one spouse takes a large asset, such as a home or retirement plan, that spouse makes an equity pay out to the other spouse to compensate them for their marital interest. Colorado law requires equitable distribution and while arguments can be made for an unequal distribution, Courts generally start at presuming that a 50/50 split of assets is equitable. As with all provisions in a separation agreement, dates and methods of transfer should always be clearly spelled out.
Dissolution and family law matters can disturb the status quo and are often difficult, however you can turn change into opportunity. At Janko Family Law we work with you to define and meet your goals and priorities. We are committed to pursuing settlement to preserve family relations to the maximum extent possible, however can also zealously represent your interests in contested litigation. Give us a call for a complimentary case assessment at 719-344-5523, or fill out our confidential online intake form.