Colorado residents undergoing a divorce need to be aware of the differences between marital property and separate property as well as know whether they live in a community property state or an equitable distribution state. There are nine community property states, in which marital property needs to be separated under a 50/50 rule. The other 41 states, including Colorado, are equitable distribution states. These states require the distribution of marital property to be fair and equitable to both parties during a divorce.
Marital property generally includes income and assets that are gained by either spouse throughout the marriage. This is the case even if the property does not have the name of the other spouse on them. Retirement fund accounts that are held in one spouse’s name will still be considered marital property as will life insurance policies and brokerage accounts.
Separately owned property is a specific class of property considered to be owned by a single spouse. Separate property includes property acquired prior to the marriage, such as a home that one spouse owned before getting married. It also includes inheritances that are specifically willed to one spouse and gifts that are received by the person from a third party. Separate property also includes settlements from personal injury judgments. An asset’s status as separate may be lost if it is comingled with marital assets.
A family law attorney may help Colorado couples determine which of their assets are separate and are marital. Since Colorado is an equitable distribution state, the division of marital assets may be complicated, but an attorney may be able to evaluate a couple’s assets and simplify the settlement process or even help the couple negotiate an equitable settlement outside of court.
Source: Huffington Post, “Understanding how assets get divided in divorce“, Jeff Landers, June 14, 2013