Denver Divorce and Real Estate Lawyer Blog. (Vol 1.15)
by Craig Franklin Chambers Esq. The Littleton Lawyer.
7851 S. Elati Street #204, Littleton, CO 80120
As a Colorado law firm specializing in Colorado real estate, divorce and family law in Denver, Lone Tree, Littleton, South Jeffco, Lakewood, and Highlands Ranch, I often handle cases involving the division of property in a dissolution of marriage. The question arises: How is My Property Divided in a Divorce?
In Colorado, a divorce is an equitable proceeding. The judge will divide the assets and the debts based on his idea of fairness, keeping in mind the statutory factors listed in C.R.S. 14-10-114. When talking about property division, you are also talking about dividing the martial debt. The division of the marital property division is a huge issue in most divorces. An inequitable property division can result in a financial disaster once the parties are divorced.
The purpose of the property division is to equitably divide the assets, so that each party can start their life again with the ability to support themselves. If there is an inadequate amount of property or income, if your spouse meets the statutory threshold, the court can also award spousal maintenance or alimony.
How the cars and houses are titled and whose names the debts are in doesn't matter in a Colorado divorce. What matters is if the assets or debts were acquired during the marriage or if they were inherited, a gift, or acquired before the marriage.
In other words, in a typical dissolution of marriage, there is no "my" in the division of property and debts. Her student loan acquired during the marriage is "his and her" student loan. His Visa credit card acquired during the marriage is "his and her" Visa. His fishing cabin is "his and her" fishing cabin. His 401k is "his and her" 401k. The parties to the marriage are treated as one unit.
Under the Colorado divorce statutes, if the debt or asset was pre-marital, inherited, or a gift, the asset is separate and non-marital but appreciation is still marital. The appreciation or increase of the asset or debt, not the original asset or debt, is subject to equitable division.
The first thing we need to do for the property division in a dissolution of marriage is define the "pie," i.e. determine which assets and debts are marital and subject to division. The first phase in dividing the property is the Disclosure and Discovery phase.
Each party fills out a sworn financial affidavit and provides various other disclosures as set forth in C.R.C.P. 16.2. These disclosures include documents supporting income, assets, and debts such as bank, brokerage, and credit card statements. It is important that these disclosures be complete because if you neglect to disclose even a small asset, such as an old dormant savings account, the divorce can be set aside whenever the other side discovers your failure to disclose.
If either party desires more information from their spouse, the parties can engage in the discovery process, which includes requests for additional information on any issue in the divorce. The discovery process is based on the Colorado Rules of Civil Procedure and includes the right to do depositions, propound interrogatories, requests for admissions and requests for production of documents.
The next phase in dividing the property is the Valuation and Appraisal phase. We need to value the "pie." Some assets or debts, such as bank and brokerage accounts and credit card statements are easy to determine. If you are claiming a debt or asset is pre-marital, you will need current statements as well as statements from right before the date of the marriage.
Others assets and debts require independent, professional evaluation. The parties need to agree on the value of a business, for example, or of a house. If they are unable to do so, the parties at least need to agree on an expert for valuation purposes; if this is not possible, each party needs to hire a professional valuation of the asset by an expert who will testify about it at an adversarial Permanent Orders hearing.
The last phase in dividing the property is the Negotiation and Hearing phase. Once the financial circumstances of the parties are fully understood, we need to divide or slice the "pie." The parties need to negotiate an equitable distribution of the assets and debts. That often means that the assets and debts are divided in half, but not necessarily, there is no mathematical formula in Colorado.
The divorce is an equitable proceeding, which means the court is open to evidence and arguments as to how to fairly divide the assets and the debts under the circumstances of the marriage. By "fair", it is not relevant as to marital misconduct or who caused the breakdown of the marriage. Colorado is a "No-Fault" state. In this context, fair means equitable in terms of re-establishing each party financially after the divorce.
The difficult part is that the lenders and credit-card holders do not release one spouse from the obligations of a debt simply because the parties are getting a divorce. Title to a home can be transferred with a quitclaim deed, but that does not relieve the quitclaimed spouse from the obligations for the mortgage under the loan. Further, his inability to be removed from the loan can affect his credit or his ability to buy another residence after the divorce.
If a credit card or a car loan is in one spouse's name, it doesn't usually make sense to allocate that debt to the other spouse. It is often more practical or easier to provide some other setoff. If an asset, like a house, has equity or a loan, the parties need to determine the practical aspects of refinancing the home to get the other spouse paid off or removed from the loan. In many cases, it is more practical to simply sell the marital home.
Once the "pie" is defined and valued, the negotiation of marital property division can be easy (and inexpensive) or this can be difficult (and very expensive), depending on how the negotiations go and if the parties cooperate. It is up to the parties to negotiate, or if the parties cannot agree, to the discretion of the judge at the Permanent Orders hearing.