Property Division

It may seem strange that the parties and the court have to begin the process of dividing property in a divorce by asking “what is property?”, but the question is not as simple as it seems. A surprising number of family law cases have been appealed because the parties, and even the courts, were uncertain whether certain items—educational degrees, professional goodwill, season tickets to sporting or cultural events, minority ownership of a business, and so on—even qualify as property. The analysis can get even more complicated when third parties are involved, such as with interests in a trust or certain employment benefits.

Some of the most common types of property that get divided in a divorce include:

• Homes;
• Bank accounts;
• Motor vehicles;
• Retirement accounts/pensions;
• Investments;
• Rental properties;
• Household goods (including furniture); and
• Business Interests.

After identifying whether an item qualifies as property, the parties and/or the court must then determine whether the property is “marital” or “separate” in nature. Contrary to popular belief, this determination involves a lot more than just looking to see who bought the item or whose name is on the ownership documents. In Colorado, the mere fact that someone’s name is associated with an asset or a liability is not conclusive as to how that item will be divided in a divorce. Instead, the determination of how any property item will be divided will depend, in large part, on when the property was acquired and what funds were used for its purchase. (And remember—property can include not just assets, but debts, too!)

Generally speaking, any property that is acquired or any debt that is accumulated during the course of the marriage will be deemed “marital,” and therefore subject to division in the divorce. Like almost all rules in family law, there are exceptions, such as property that is acquired by gift or inheritance. If an item is determined to be the separate property of either spouse, that item is not subject to being divided by the court in a divorce, but the court can still consider the value of that separate property when making its decision on how to divide the marital property.

Even property that technically qualifies as “separate” property may still have a marital value component assigned to it, which the parties and the court must consider. For example, any increase in the value of either party’s separate real estate or investments that accrued over the course of the marriage will generally be deemed marital and subject to division by the court. As with all marital property, how that increased value will be divided is ultimately up to the discretion of the court in the event the parties are unable to agree to an equitable division on their own. Thus, the value of all assets and debts, even those that qualify as separate property, must be determined because all of those values can affect how to determine what is equitable in any individual case. This process may warrant the consultation or retention of experts, depending on what type of property needs to be valued.

Once all property has been categorized and valued, the parties and/or the court can begin the process of dividing the marital assets and debts between the parties in an equitable and fair manner.

Keep in mind that what is equitable and fair in one case will be different from what is equitable and fair in any other case. While it may seem overwhelming to think about all of the steps involved in just this one aspect of your divorce, it is important to note that this issue can often be resolved in many different ways because many asset and/or debts can be divided in whole or in part.

Dividing up property in divorce is not just financially complicated but it can also become emotionally charged and devolve into ugly disagreements between the parties, even in cases the parties previously agreed on how to divide the property. In some cases, the distribution of property in divorce can sometimes be used as leverage to resolve other seemingly unrelated issues in a divorce, such as spousal maintenance and attorneys’ fees. In our experience, the division of property is often the component of divorce that is most amenable to negotiation and settlement, potentially leaving one fewer issue for the court to decide or putting the parties one step closer to a complete and global settlement of their divorce. To take full advantage, you will need to know what is fair and supported by the law, and having an honest and experienced attorney by your side is invaluable.