Colorado Divorce: Dividing Property

Find out how marital property (and debt) is divided in an Colorado divorce case.

Laws governing how marital property is divided at divorce vary from state to state. Colorado law requires a division that is equitable, meaning that it is fair--it doesn't necessarily have to be exactly equal. Some couples are able to agree on how to divide everything on their own, while others seek the help of attorneys or a mediator to negotiate a settlement. Couples who don’t manage to resolve property issues outside of court will end up going to court to ask for a decision from an arbitrator or a judge. A Colorado judge will consider the following factors in deciding what kind of property division is fair: 

  • the economic circumstances of each spouse,
  • the desirability of awarding the family home, or the right to live in it for a reasonable period of time, to the parent who has physical custody of children the majority of the time,
  • any increase or decrease in the value of a spouse’s separate property during the marriage,
  • any depletion of a spouse’s separate property for marital purposes, and
  • the value of the property set apart to each spouse. 

Marital Property and Separate Property 

The first step in the division process is deciding whether property is marital or separate. Marital property includes most assets and debts a couple acquires during marriage. Property is separate if a spouse owned it before marriage or acquired it during marriage by gift or inheritance. Separate property also includes items purchased with or exchanged for separate property.

Any increase in value of separate property during marriage is marital property, but the original property (or value of the property) remains separate, provided that the spouse claiming it can trace it through financial records or other documents. 

Sometimes spouses convert separate property into marital property, or vice versa. A couple can specify whether certain property is separate or marital in a written agreement that they sign either before or during marriage. A spouse can also change separate property into marital property by changing title from individual to joint ownership, in which case a court would presume that the spouse intended to make a gift of the property to the marriage.

Marital and separate property can also be mixed together—sometimes called “commingling.”  Some couples combine their separate assets intentionally; others do so simply by being careless. A premarital bank account belonging to one spouse can become marital property if the other spouse makes deposits to it; a house owned by one spouse alone can become marital property if both spouses pay the mortgage and other expenses. If the spouses aren’t able to decide what belongs to whom, the judge will have to decide whether any or all of the commingled property was a gift to the marriage or whether the original owner should be reimbursed in whole or in part. These situations can be very complicated and may require the assistance of an attorney. 

Assessing Value 

After determining which property is marital property, the couple, or the court, will assign a monetary value to each item. Couples who need help determining values can hire professional appraisers.  Some financial assets, such as retirement accounts, can be difficult to evaluate and may require the assistance of a financial professional, such as a C.P.A. or an actuary. 

Dividing the Property 

Spouses can divide assets by assigning certain items to each spouse, possibly with an equalizing payment if one spouse gets substantially more than the other, or by selling property and dividing the proceeds. They can also agree to continue to own property together if they think they'll be able to cooperate as co-owners. Many people don't find this a very appealing option, as it requires them to continue dealing with their ex, but some couples agree to keep the family home until children are out of school. Others may keep investment property in hopes it will increase in value.  

The couple must also assign all debt accrued during the marriage, including mortgages, car loans and credit card debts, to one of the spouses.

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