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. In fact, an equitable division of property does not mean equal.
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, the majority of property acquired during the marriage will be deemed marital, even if the property was acquired by only one spouse, or even if 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. 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 be her separate property.
Further complications can arise when examining whether property is marital or separate. Many times 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 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, or 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, and 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 always mean equally.