PROPERTY DIVISION IN A COLORADO DIVORCE: AN EXPERIENCED DENVER COLORADO DIVORCE ATTORNEY'S TAKE  

With a caveat discussed below, the central concepts of property division 14-10-113 in a Colorado divorce are very simple: Marital property, that is property acquired during a marriage, is split evenly. Separate property, that is property owned before the marriage, or property acquired during the marriage by gift or inheritance, is the separate property of that spouse.

As to any gain on a separate asset which occurs during the marriage, why that is marital. In divorce speak, it's called marital gain. Marital gain on the separate property of a spouse may be offset by marital loss on another asset belonging to that spouse. Retirement plans are subject to this marital property/marital gain analysis.

That's pretty much it. However complications can arise when separate and marital assets are commingled, which often happens in a marriage. Was there a "gift to the marriage"? (Ain’t that the perennial $64,000 question?).  If not, tracing becomes very important. The quality of record keeping can be a decisive factor in whether one spouse successfully teases out his or her separate property from the marital matrix. The effectiveness of discovery can be an important factor here.

Another aspect of property division can involve what I call dueling experts, also known as forensic accountants. The assessment of value, both present and at some point in the past (remember, that's how you arrive at marital gain on a separate asset) can be critical. The greatest valuation problems arise in trying to determine the value of a closely held business or profession. Being self-employed is the American Way, but it can lead to uncertainty in a divorce. Ed Lederman’s golden rule of Colorado property division: After fourteen years of experience I say this: If the prospect of retaining a forensic accountant expert makes you gag (and it should, that’s more $’s going to a profession other than the hallowed legal one), consider the law of maintenance. (Delphic, wouldn’t you say?).

Remember the "caveat" I mentioned up front in this piece? In most Colorado property settlements, the concepts of marital property, separate property, and marital gain, look, feel, and result in distributions very much like community property concepts. But Colorado is not a community property state.

Rather, Colorado is a "marital" property state. And just what that means is this: the court is bound to distribute marital property "equitably", not necessarily "equally". In short, Colorado courts sitting in certain divorces have a great deal of discretion.

What circumstances trigger the exercise of this discretion? In divorces where there is what I, the best divorce lawyer in the universe,  call “Extreme wealth” I find the dynamics follow intuitively accessible moral,  political, social, economic, and Darwinian nostrums. Give me a call if you are curious.

Finally, and this happens quite often, the court can consider maintenance and property division together before using its discretion to make an equitable distribution of marital property. In fact call this principal the magic Property Division/Maintenance nexus/dynamic. Another of the high art areas.

On the whole, Colorado courts have greater flexibility in divvying up marital assets than community property states. And I believe that's a good thing.

Recent Developments re "Bird in the bush" assets--Expectancy Interests and Options.

What if soon-to-be-ex hubby is mentioned prominently in dear old, rich, ninety-five year old dad’s will? Is that expectancy interest to be considered a marital asset? A separate asset? In 2001 the State Supreme Court seemed to say yes to both in In Re Marriage of Balanson 25 P.3d 28 (Colo. 2001). But, alas and alack, within a year the state legislature put the kibosh to that by prohibiting the divorce court from even considering expectancy interests as "economic circumstance" (See discussion of Alimony/Maintenance) let alone counting them as property. 14-10-113 (7). So, unless hubby has a non-revocable interest in, say, a trust, forget about it.

Options granted a spouse in their employment but not yet exercised may count as marital property. The issue turns on whether that spouse must continue to work in order to, at some point in the future, exercise the option. So, if the spouse could quit XYZ Corp. and still could in the future exercise the option then it is property, and probably marital. If the spouse would lose any claim to the option if he/she were to quit, then it is not considered an asset. The upshot can be a close consideration of just when one sets permanent orders.

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