Most couples believe their love is forever when they take their vows but life doesn’t always live up to our expectations and dreams. Some couples come to the sad conclusion that they are better off parting ways emotionally and legally. Colorado’s divorce rate is at 12%, up by 4% since the pandemic. Unfortunately, a significant number of couples who spent years building up their assets through financial investments in an effort to ensure a financially secure future for their family and their retirements find themselves in the unenviable position of dividing their nest egg to support two separate households.
If you’re facing the prospect of divorce, you might be worried about what happens to the financial investments you’ve made both before and during your marriage. How do Colorado courts divide financial investments during a divorce?
Colorado’s Marital Property Laws
Unlike the handful of states with community property laws for divorce, where a couple’s assets and debts become “community property” during marriage and face a 50/50 split during a divorce, Colorado is an equitable distribution state where the assets, property, and investments are divided in a way the courts consider equitable and fair in each unique case, even if not strictly 50/50. If a couple can’t decide on a plan for dividing their marital property in a way that satisfies them both, the Colorado divorce court will step in with a division plan that it considers equitable. But first, the court requires full financial disclosure from both parties, including marital and individual properties and financial holdings.
What is Marital Property?
Some couples come into a marriage with their own holdings, including various financial investments, savings accounts, valuables, artwork, and real estate property they’ve purchased as an individual. These are individual properties and aren’t typically considered marital property subject to division. A judge might make exceptions in some cases, such as when one spouse owns a property at the start of a marriage but the other puts a significant amount of money and time into improving the property. Individual bank accounts may also become joint marital property if the spouse adds money to the account. Besides assets that belong to each individual before a marriage or those included in prenuptial agreements, all other assets, including financial investments acquired during the marriage are considered marital property.
Some examples of common marital property include the following:
- Real estate holdings, including the family home
- Bank accounts
- Retirement accounts
- Stock options
Home goods, furniture, appliances, and pets are also considered marital property subject to equitable division in Colorado.
How Does the Equitable Division of Investments Work?
Some financial investments remain individual property during a marriage including those specified that way in a prenuptial agreement or if one partner owned the investment prior to the marriage, inherited the investment, or acquired it as a gift. It may also be considered individual property if one partner purchased the stock, mutual fund, or other investment through money earned from individually owned property. Only if the increased value of individual property occurs through a spouse’s efforts of time and money can the property be subject to division.
The individual or marital category of stock may depend on the date the stock vests. Unvested stock held by an individual prior to marriage as well as any part that was vested during the marriage remains personal property but both vested and unvested stock earned during the marriage is marital property.
When couples can’t agree on their own division plan, it may be left up to a judge to decide how to divide the profits of investments that appreciated in value during a marriage.
Because there are many complexities involved in untangling marital property from individual property during a divorce, it’s essential to work with an experienced Denver divorce attorney to advocate for the best possible outcome for your side. Many times, a great attorney can help you avoid an impartial judge making these critical decisions for you by helping you achieve an agreed-upon settlement with your spouse.