Leaders in litigation

How is property divided in Colorado?

Property Division starts with the Colorado Uniform Dissolution of Marriage Act

When spouses divorce in Colorado, an agreement must be made about how property should be divided between the two parties. If spouses are unable to come to an agreement, a judge will make a ruling about property division.

Because Colorado is an equitable distribution state, pursuant to the Colorado Uniform Dissolution of Marriage Act, the courts are required to divide all marital property equitably. Many people mistakenly believe this requires the courts to divide property equally. An equitable division of property does not necessarily mean equal.

Judges in states that acknowledge community property assume that all property acquired during a marriage belongs to both spouses and should be split down the middle in the event of divorce. In Colorado and other equitable distribution states, many different factors are considered before a decision is made about how to divide marital property. In limited cases, the spouse who made a greater financial contribution to the purchase of marital property ends up being able to keep most of that property. This is more often true when there are no children and both parties were equally capable of working full-time outside of the home.

How do Colorado Courts determine Marital Property vs Separate Property?

Before reaching a determination for an equitable division of property, the courts are required to determine whether the property is marital or separate.

In simplest terms, most property acquired during the marriage will be deemed marital. This is true even if only one spouse acquired the property or the property is titled solely in one party’s name.

As an example, if Wife has a $10,000 retirement account at the beginning of the marriage and the account grows in value to $15,000, then the $5,000 growth is deemed “marital property.” Another example might be a home titled solely in one party’s name. If the value or equity of the home increases during the marriage, then the increase shall be considered a marital asset subject to division by the court.

Exceptions to property acquired during the marriage, which remain separate property, include any property acquired from gift, bequest, devise or descent. If one party receives an inheritance during the marriage, the inheritance shall remain separate property if it is traceable or not comingled with marital property.

Just as in the example above, however, even increases on separate property shall be deemed marital property if accrued during the marriage. In this example, Wife receives $10,000 from Aunt Helen. During the marriage, although Wife keeps the inheritance in her separate bank account, the inheritance grows to $15,000. Again, the $5,000 increase in value is deemed marital property subject to division by the court. If Wife spends the $10,000 on a car and titles the car solely in her name, then the car will likely be her separate property. If Wife spends $12,000 ($10,000 inheritance and $2,000 marital funds) on a car, it may be that a proportion of the car is separate property.

Disputes over Marital Property vs Separate Property

Further complications can arise when examining whether property is marital or separate. Very often spouses commingle their funds. They might place the funds in a joint account, remove the funds to a sole account, then purchase a joint asset, then sell the asset, etc. In the simplest terms, once an asset is placed in joint title, the asset typically loses its separate character and is now defined as a marital asset.

Regardless of whether a marital asset was acquired by one party’s sole effort, both parties’ efforts, or simply by growth of the asset without any assistance from either party, the court still retains the authority to divide the marital property equitably. Thus, once the court determines the entire marital pot of assets, the court can award the blue car to wife and the red car to husband.

Similarly, one party can keep the retirement account, while the other party retains the vacation home. Remember, the court must simply divide property in such proportions as it deems just; and just, does not necessarily mean equally.

What if my Spouse is Hiding Assets during our Divorce?

Your spouse may not have a legal justification for hiding assets, but he or she may break the intent of our law to keep those assets from one another. It happens. People take a lot of risks where money is concerned. This is especially common in contentious divorce cases, as your spouse may also do it to cause you direct financial harm.

It’s important to understand how your spouse may attempt to hide assets. A lot of people count on having a spouse who is too disconnected from the family’s finances to understand that the financial statements do not appear fair and accurate. They want you to overlook their attempts. You must understand what warning signs to watch for so that this does not happen to you.

With that in mind, here are a few common ways that people hide assets.

  1. Overpaying on bills or taxes. Your spouse could pay $15,000 to a credit card company when you only owed $10,000. The bank that issued the card may then issue a check for $5,000 to your spouse. They could cash it elsewhere and hide the money, making it harder for you to see the withdrawal. In some cases, they even time things so that the refund doesn’t come back until the divorce ends.
  2. Lying about income levels. This usually means underreporting what they earned for that year. Often, when looking for hidden assets, you just want to compare income tax statements against current accounts. This exposes missing assets. If the income tax statements are artificially low, though, your spouse can hide the corresponding assets.
  3. Buying items that you may undervalue. If your spouse has specialized knowledge about any particular field, they may use it to buy something worth more than you realize. For instance, they could buy a painting that is worth $100,000, knowing you have no knowledge of art. They’ll then report it as being worth $10,000. If you accept that, they “hide” $90,000 of value.
  4. Creating fake loans with family members. These may also appear to be gifts. Your spouse could say that he or she “loaned” a sibling money to start a business, for instance. This takes the money out of your marital estate. After the divorce, though, that sibling could give the money back to your spouse. They never intended it to go to any business and simply wanted to hide it from you.

These are merely four examples, but they show you how far people may go to hide assets and defraud you during a divorce case. If you’re worried that this is going to happen or already has, make sure you know what legal steps you can take to make it right.

The Discovery Process in Hidden Assets

It’s also important to understand the discovery process and how it relates to hidden assets. For those of us not familiar with what discovery refers to, it is the exchange of financial and economic information between spouses and their attorneys.

This financial disclosure between spouses and the court is a necessary step in the divorce process. Considering the financial impact a high asset divorce may have on spouses, full, honest and accurate disclosure during the discovery process is crucial.

If one spouse or their attorney does not feel the information provided to them during the discovery process is entirely accurate, they may ask for additional information through a series of interrogative questions or a request for admissions.

Many times, the financial information provided through these means is sufficient enough to proceed with the divorce process. However, in complex cases, a forensic accountant may be asked to examine a spouse’s financials further. This in-depth discovery tactic can be extremely helpful when one or both spouses own a business.

How can I Locate Hidden Assets during a Divorce?

Working with an attorney well-versed in the methods for uncovering assets is vital to your case. Experience is key in this regard, as an attorney with prior experience in discovering hidden assets will have a better chance locating any wrongdoing. While you must be careful with the methods you use when searching for hidden assets (as some evidence may not be admissible in court), an attorney will be able to assist you in the best plan of attack.

Fortunately, it’s not difficult to uncover undisclosed assets in a divorce, no matter which method you use. Even hidden property can be identified by tax returns and the like. The key is to understand where and how to look, as well as have the appropriate legal assistance to ensure your search is as thorough as possible.

Common Property Division Mistakes Made in Divorce

When you understand your legal rights and the mistakes you need to avoid, it’s much easier to come out on the other side with a clear understanding of your situation and what the future will bring.

Here are just a few of the most common property division mistakes that people make:

  • Forgetting about the future: It’s easy to focus on the here and now that you overlook the impact of your divorce on your life down the road. For example, if you’re young, you may be okay with the idea of forgoing retirement assets in exchange for others. After all, you have more time to save, right? While it’s true that you’re not retiring any time soon, you may end up regretting this decision when it comes time to think about this.
  • Keeping items you can’t afford: Many people fight to keep the family home because they think it’s the right thing to do. Or they think that it’s one of the best ways to get back at their soon-to-be-ex-spouse. But here’s a potential problem: You don’t have enough money to pay for the home post-divorce, which leads you down a challenging financial path. By creating a budget before you discuss property division, you’ll have a clear idea of what you can afford in the future.
  • Neglecting to consider taxes: Taxes should be at the top of your mind when going through a divorce and dividing assets. Your goal is to minimize your tax hit, both now and in the future. Again, if you make short-sighted decisions, you could end up with a tax bill in the future that you could have otherwise avoided.

Property Division of a Home during a Divorce

Some Colorado couples may mistakenly believe that when they end their marriage, they are also ending their joint financial commitments. Any debt or assets that were in a person’s name when they were married are still seen as belonging to both parties after a divorce. This can cause significant problems with a person’s credit score and debt-to-income ratio, especially where a house is concerned if a couple does not sell it.

It might be logical to think that if people get divorced and one of them moves out of a home that they are no longer responsible for it. However, this is not the case from a lender’s perspective.

The only way to protect one’s credit if an ex misses a mortgage payment is to get one’s name off the loan. This can be accomplished by refinancing or a loan assumption and putting only the person’s name who is living in the home on the mortgage. If an ex does not qualify for a new mortgage, then selling the home is a solution.

Refinancing to get someone’s name off the loan might be the only way that person can qualify for a new loan as well. Even if a divorce decree awards a house to someone’s ex, a lender is still going to consider the debt of that home when deciding whether to give someone a loan for a new house.

Something else to be wary of is buying a new home while still married because spouses will have a legal interest in the new home. If one cannot wait until a divorce is finalized, he or she should ask their ex to sign a quitclaim deed to release interest in the new house.

Uncommon Assets in Property Division

Many people divorcing in Colorado may feel that dividing assets following a divorce is mostly about the marital home, retirement plans and the money in the bank. However, those who realize that property division encompasses much more than that may walk away from the union financially stronger.

Several legal experts that write about the financial impact of divorce urge people to think about uncommon assets such as stock, business ownership, cemetery plots, club memberships and lottery tickets. While they may be unusual to consider when divorcing, they all contain a significant value that should be included in the division of assets.

Pets are an especially important asset to consider. Although they feel like children to some, in Colorado, they are considered property and subject to equitable division. As such, it is important to determine who will be responsible for the pet and expenses.

Furthermore, it may be easy to overlook benefits that were offered by former employers, and instead solely focus on assets that have been accrued under current employment. A spouse may have 401(k)s, deferred compensation, surviving spouse benefits, stock options or other compensation plans that should be considered.

The experts also included other items such as family keepsakes, gifts that were given during the marriage and money that is expected to be returned after having loaned it out.

Division of Retirement Accounts Can be Complex During Divorce

Divorce can be a possibility for people of every age. For older Colorado couples, divvying up assets such as retirement accounts can render the process that much more difficult. Here at Ciancio Ciancio Brown, P.C., we can provide those seeking a dissolution of their marriages with the information they need better to navigate asset division and other complex divorce matters.

CNBC details some of the issues that must be considered when dividing a retirement account during divorce proceedings. Understanding the total value offered by a specific account is an important matter. Accounts are taxed differently depending on the type in question, which can play a role in the final amount. For instance, some accounts require taxes to paid as contributions are made, while others are only taxed upon payout.

Ownership of accounts is another concern for many couples. In this case, it’s a good idea to update name designations on financial accounts after divorce. Failure to do so could end in assets being distributed to the wrong person, as well as lengthy court battles. Couples should also be aware that in most divorce cases, money accrued during the marriage will most like be split evenly.

Some spouses may desire to retain the family home in exchange for their share of financial accounts. This is not recommended, as in many instances, retirement accounts are not accurately valued and may end up providing more funding than initially expected. This decision can also actually increase costs down the line since homes will most likely require an influx of cash for maintenance and other expenses.

How Can I Protect my Business Assets During my Divorce?

If you are facing a divorce and own your own business, there are special considerations that you must take into account while dividing up your marital property. Even if you started your business prior to your marriage, you probably wouldn’t be able to just walk away with all of your business assets.

Contributions from marital resources made to your business during your marriage intertwine your personal and business assets. This makes both subject to division during a subsequent divorce. Just like with your home, you need to deal with business valuation and taxation aspects during the property division process.

If you did not pay yourself a competitive salary but reinvested your earnings back into the business, your spouse may be able to claim a substantial portion of the business. If your spouse contributed to your business in some way — sweat equity, business ideas, part-time help — this can also entitle him or her to a portion of your business interests.

If you have a prenuptial or postnuptial agreement, you may have already determined what will (or should) happen in the event of a divorce. Even during the time you are unsure of a divorce, you may wish to hammer out a postnup to help dispense with business asset issues. Postnuptial agreements cannot be enforced if entered at a time that you are contemplating or in the process of a divorce.

What are Some of My Options?

There are always options. Here is a few of the most common:

  • Buyout: You may wish to buy out your spouse with other non-business assets you retained during the divorce. If there is not enough cash to purchase your spouse’s interest, you may be able to draft a property settlement note, which allows you to pay it off over time with interest.
  • Co-ownership: If you and your spouse have been in business together and you still have an amicable relationship, continuing your business relationship may be preferable to other options. However, be sure to rewrite your business documents to clarify your separate roles and to establish buy-sell agreements for the future.
  • Sell out: Sell the business, split the profits and go your separate ways. While this may not be the most appealing choice, it sometimes may be your only option.

There are many complexities to divorce and property division, especially when business interests are involved. Don’t let a divorce destroy what you have worked so hard to build. Seek professional help at every step of the process.

Should Embryos be part of High Asset Division or Custody Battles?

Certainly, most parents would agree that no possessions in the world are more valuable than their children. However, when a couple in Colorado files for a high asset divorce, their children would never be divided like marital property. Instead, a parenting plan would be written up, and custody rights would be appropriately granted.

But what should happen to unborn children?

This dilemma has arisen in various courts across the nation. One man is concerned that his ex-wife, who was awarded custody of frozen embryos, which are eggs that have been fertilized, might try and collect child support if any of the embryos are implanted in the woman and she becomes pregnant.

He asked for the embryos to be destroyed but an agreement gave his ex-wife the right to keep them. Judges have ruled in the past that a woman’s harvested eggs were not yet human beings and should be divided as property, but given that the embryos contain physiological parts of both the ex-husband and wife, the case is far less simple.

According to sources, the advancement of reproductive science is making it difficult for some former families. Many people believe that men should not become parents involuntarily, which will likely force them to have to pay support, simply because they had previously given their sperm in an attempt to have a baby with their former partner.

If you have tried alternative methods of conceiving children and now you and your partner would like a divorce, speaking with an experienced family law attorney may likely be the best way of protecting both your assets and your children, whether unborn or not.

Colorado has 2018 caselaw directing parties what can be done with embryos. The Court will first look at any existing agreement regarding disposition of pre-embryos in the event of divorce. In the absence of such an agreement, the Court will balance the parties’ interests.

Property Division Is a Marathon, Not a Sprint

While many Denver couples enter marriage believing they will last forever, the unfortunate reality is that sometimes divorces are necessary. When this occurs, untangling marital property that two people have accrued together can be lengthy and emotionally wearying. Those who are considering a divorce may wish to draw on the advice of legal, financial and mediation professionals to help them understand the mental and emotional impact of dividing marital property.

Divorce experts advise that people approach the settlement process with a marathon mindset. By mentally preparing for the possibility that these discussions may consume a great deal of time and energy, you can help to ensure that you do not agree to unfavorable terms simply because you are tired of arguing.

To do this, these experts offer a variety of tips that can help people stay healthy and emotionally grounded, including spending time with friends and family, getting enough sleep and finding time to enjoy pleasant and relaxing activities. For many people, such investments in emotional health may help to secure a more favorable divorce settlement.

Divorce can be unpleasant, but it can be made slightly better if the parties involved recognize that the process may take a lot of time, effort and emotional strain, and handle these burdens in a healthy manner. Regardless of whether you are dealing with simple property division or complex valuations of business assets and retirement accounts, having the right attitude when entering into property division negotiations can make a big difference. If you are considering a divorce and would like to gain a better understanding of what to expect in the process, you may wish to consult with an attorney.


Call 303-395-4773 or email Us Today to get started


Litigation is a journey. This is a journey we have taken with our clients a countless number of times. If you face the uncertainty, risk, fear, anger, or disbelief that comes with the prospect of going through a legal dispute, the law firm of Ciancio Ciancio Brown, P.C. will help you through it.