What Does Equitable Distribution Mean?
Equitable distribution means that both parties receive a fair share of the marital assets, which includes property, income, and other financial resources accumulated during the marriage. This approach helps prevent financial disparity and ensures that both parties can maintain a similar standard of living, reducing potential conflicts and fostering a sense of mutual respect.
It’s important to note that a “fair share” doesn’t necessarily mean assets are divided equally. In many divorces, one spouse is expected to be financially disadvantaged by the divorce. In such situations, the court may order a greater portion of marital assets to that disadvantaged spouse under the presumption that the other spouse doesn’t have as great of a need for financial resources.
Debt Is Also Divided During Divorce
While you may be focused on retaining marital assets during divorce, you might forget about the debt you share with your spouse. Marital debt is also divided equitably during divorce, which means one spouse could be responsible for a greater portion of the shared debt.
Marital Assets vs. Separate Assets
In Colorado, distinguishing between marital assets and separate assets is a crucial aspect of the property distribution process during a divorce. Understanding the difference between these two types of assets helps determine what will be subject to equitable distribution.
Steps in the Property Division Process
Identify Marital vs. Separate Property
The first step is distinguishing between marital and separate property.
- Marital Property includes assets and debts acquired during the marriage, regardless of whose name is on the title. Examples include income, homes, retirement accounts, and even debt like car loans or credit cards.
- Separate Property involves assets owned by either spouse before the marriage, inheritances, or gifts received by one spouse. These are typically not divided unless they were “commingled” with marital assets (e.g., using inherited money for a joint purchase).
Valuation of Assets
Next, all marital property must be accurately valued. This can involve appraisers, financial experts, or forensic accountants to ensure fair market values are assigned to items like real estate, investments, and businesses. Accurate valuations are essential for fair distribution.
Equitable Division
Once property and debts are identified and valued, the court determines how to divide them equitably. Factors that influence this include:
- Each Spouse’s Economic Circumstances: Courts evaluate each party's financial standing post-divorce to balance disparities.
- Contributions to the Marriage: Both financial contributions (like income) and non-financial contributions (such as staying home to raise children) are considered.
- Future Needs: Courts weigh each party’s earning potential or anticipated expenses, like healthcare or childcare.
- Marital Agreements: If the couple has a valid prenuptial or postnuptial agreement, its terms can significantly impact how property is divided.
Unique Aspects of Colorado Law
- Commingled Assets
Property that begins as separate but becomes mingled with marital property may lose its separate designation. For example, depositing personal inheritance funds into a joint account could make them subject to division. - Retirement Accounts / Pensions
Retirement accounts are often one of the most significant assets in a divorce. Colorado courts divide the portion of these accounts that was earned during the marriage and use tools like Qualified Domestic Relations Orders (QDROs) to ensure proper allocation. - Debt Division
Just like assets, marital debts are also divided equitably. Colorado courts strive to match responsibility for debts in a way that aligns with each spouse’s financial capacity post-divorce.
Preparing for Property Division in Colorado
Here’s how you can prepare for this important process:
- Create a Comprehensive Asset and Debt Inventory
Begin by listing everything you and your spouse own—and owe. Include homes, vehicles, retirement accounts, personal belongings, and any outstanding debts. - Organize Documentation
Collect bank statements, titles, tax returns, and loan agreements to support valuations and ownership claims. - Stay Objective
Property division decisions can be stressful and emotional. Focus on long-term goals instead of emotional attachments to specific items. - Seek Legal Guidance
Having an attorney who understands Colorado law can help you safeguard your rights and ensure the division process is handled fairly.
Call (303) 590-3690 today to request a free initial consultation with our Douglas county property division attorneys.
