Colorado laws pertaining to divorce and property division are complex and often misinterpreted. To make matters more difficult, people often hear about the laws in other states and assume that the laws are similar here, which is not always the case.
Here are 7 things that people often get wrong about Colorado property division laws:
1. Colorado Is Not A Community Property State
Colorado law does not subscribe to the concept of community property. Instead, Colorado is an equitable distribution state.
2. Marital Property Is Not Always Divided Equally
All property acquired during the marriage, with exceptions such as inheritances and gifts, is considered marital property and subject to division. Marital property is to be divided equitably. This means it is to be divided in a manner that is fair, although not necessarily equally. Determining a fair division of property requires looking at a variety of factors, including the age of spouses, each spouse’s income, each spouse’s contribution to the marital estate inclusive of contributions as a homemaker, and more.
3. Separate Property Is Not Always Completely Separate
The distinction between separate property and marital property is not always black and white. When property acquired prior to the marriage increases in value during the marriage it takes on aspects of separate property and marital property. Separate property may also be commingled with marital property, making it more difficult to characterize.
4. Title Does Not Impact Characterization
Just because one spouse has his or her name on the title of a piece of property does not mean that property will be characterized as separate property. For example, if a car was purchased during the marriage and only one spouse’s name is on the title, that car is still going to be characterized as marital property.
5. Retirement Accounts Are Not Separate Property
People often assume that their pension, 401(k) or other form of retirement account is theirs to keep after the divorce. That is not the case. If the account was created, added to or increased in value during the marriage, it will be considered marital property, either completely or in part, and subject to division.
6. Social Security Benefits Are Not Subject To Division
Colorado law says that Social Security benefits are not subject to division, nor can they be offset by providing the nonclaimant spouse with a greater portion of the marital property. However, if the marriage has lasted 10 years or more and the claimant spouse is 62 or older, the former spouse can receive benefits on the claimant spouse’s record.
7. Property Division Is Not Taxable
The transfer of property as a result of a divorce is not taxable. However, a taxable event could be created if the transfer is not handled correctly. Some assets require a specific method to be divided, such as using a QDRO to divide a retirement account. There may also be tax consequences depending on what is done with the property. If an asset, such as a piece of real estate, must be sold and the money from the sale split between spouses, taxes may need to be paid as a result of the sale.
An Attorney Can Help You Understand The Nuances Of Property Division
At Scardina Family Law, we can answer your questions about Colorado division of property and help you pursue a fair outcome.