Whose Stuff is it? The Basics of Property Division in a Divorce
During a divorce or legal separation property acquired by the spouses during the marriage (“Marital Property”) is divided between them by the court. Typically, the starting point for division is 50/50. The court, however, may divide the property as it “deems just” after considering a number of factors, including the contribution of the spouse in acquiring the property, the value of the property allocated to each spouse, the economic circumstances of each spouse at the time the property is divided up, and the increases or decreases in the value of separate property during the marriage, or the use of the separate property during the marriage for marital purposes. Although marital misconduct (having an affair) is not considered when dividing up marital property, the waste of marital property by one of the spouses may be considered. Property may be “wasted”, for example, if one of the spouses goes on a spending spree and uses property titled in their name with the result that there is less marital property available to be divided later on.
“Separate Property” is that acquired either before the marriage, by gift or inheritance, or excluded from marital property by a “valid agreement” (pre-nuptual or post-nuptial agreement). Separate Property may become Marital Property in some instances. One instance is when is when one of the spouses contributes their pre-marital property to the marriage — for example, a house held in the name of one of the spouses before the marriage is deeded over to both spouses during the marriage; another example is when the ownership of a pre-marital bank account is changed from one spouse to both spouses during the marriage.
Separate property may be both separate and marital in nature: while the value of the property at the time of the marriage is considered as separate property, any appreciation in value of that same property during the marriage is considered as marital property (the appreciated portion or amount). A decline in value of the separate property does not affect the character of the property: it remains separate and not marital property.
It does not matter how the marital property is titled. If it was acquired during the marriage, it is marital property without regard to whose name it is in.
The division of property usually occurs at the time the divorce and a decree of dissolution of the marriage is entered by the court. The value of the property being divided is determined at the time of division — this is at the time the divorce is made final and not when the parties separated.
Property is typically valued at its fair market value. This may be determined by an appraisal or the owner’s opinion of the value based upon internet research — county assessor’s valuation, NADA used vehicle value, Kelly Blue Book value, bank statements, market stock valuations, etc. Debt is valued by reference to the most recent statement from the creditor (credit card statement, mortgage statement, car loan statement, etc.).
If the property has a lien or loan against it, typically the spouse who gets the property is also made responsible for paying the related debt. The value of the property is determined by taking fair market value less the amount owed on the property.
The Colorado Statue regarding division of property in a divorce case is C.R.S. § 14-10-113 and may be found at this link.
The information provided above is general in nature, is not intended as legal advice for your particular situation and should not be relied upon without first consulting with legal counsel.