COLORADO DIVORCE - DIVIDING ASSETS AND DEBTS 

I have been practicing law in Colorado for 20 years and have handled hundreds of divorce cases.  The topic of division of marital property and debts is often one of the most important issues.

Let’s cover some basics first:

1. Colorado is NOT a community property state which means that the Court is NOT required to split marital property and debt 50-50.

2. How property is titled does not control whether it is martial or not.  For example many times a house or car is titled in only one person’s name rather than jointly.  It does not matter. If the property was acquired during the marriage, it is presumed to be marital property not just the property of the person whose name is on title.

3. Martial property and debt is generally all property or debt acquired by either spouse during the marriage except for property acquired by either person by gift or inheritance.

Is Colorado A Community Property State?

Now we can dig a little deeper. While Colorado is not a community property state (like Texas for example), judges here will typically divide marital property and debt in a 50-50 fashion or something close to that.  However, there are many times when a judge might award more property to one party than the other.  For example, if the marriage is rather short and one party contributed most of the property. A judge could also award more property to a party and then not award spousal maintenance (or “alimony” as many people still call it) because that person received more property.  In short, there are numerous scenarios for dividing assets and debts depending on the unique facts of each case.

What If  Everything Is Titled In My Spouse's Name?

As noted above, how property is titled does not control whether it is marital.  For example. I have had many cases where the house is titled in just one person’s name.  That means nothing in a divorce case assuming the house was acquired during the marriage.  The same holds true for vehicles.  Even in a case where the parties have two vehicles and each has one titled solely in his/her name, the Court does not have to award either vehicle to the party who holds title.  Simply put, the judge looks at the entire “marital estate” made up of all property and debts owned or owed by either party and fashions an “equitable” division of them.

What About Personal Gifts or Inheritance?

The general exceptions to the concept that all property/debt is presumed marital if acquired or incurred during the marriage is property acquired by gift or inheritance (including gifts between the parties).  Thus, if the marriage is 12 years but in year 5 Wife inherits $400,000, that $400,000 is her separate (i.e. non-marital) property.  However, if Wife places that money in a joint account or uses it to acquire “joint” assets, it may be deemed to have become marital property.  Assuming Wife keeps the $400,000 in an account just in her name and invests it, if it appreciates in value prior to the divorce, the “appreciation piece” is considered marital property. So, let’s say Wife invests the $400,000 and by the time of divorce the account value has grown to $520,000, then the $120,000 in appreciation is deemed martial and can be divided by the Court.  In that scenario, Husband’s claim to the “appreciation piece” would be, at most, $60,000 or 50% of the appreciation.

Who Gets The Debt?

In some cases, the unfortunate reality is that the parties have no meaningful assets but have amassed considerable debt.  Imagine a scenario where there are no assets and the parties have $80,000 in credit card debt.  Again, it does not necessarily matter if the cards are in both names or just one name.  If the debt was incurred during the marriage, it is marital debt.  That said, in dividing the debt between the parties, the judge might care how/why the debt was incurred.  Assume in the above example that $60,000 of the $80,000 was incurred by husband to fund his gambling addiction.  In that case the judge may award all of the $60,000 debt to husband.  Another scenario may be that one party earns substantially more income than the other and therefore, has the better ability to pay or “service” the debt.  In that scenario, the Court may award the lion’s share of the debt to the higher earner.  Of course, the fact the higher earner takes on more debt might also lead the court to award less or no spousal maintenance.

The above are all generalizations to provide a basic understanding. The facts of your case may result in dramatically different outcomes than those discussed above. The scenarios are endless but based on the facts of your case, I can determine a short list of likely outcomes.