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Am I Required to Share My Inheritance With My Spouse in a Colorado Divorce?

If you receive an inheritance during your marriage it is generally yours and yours alone under Colorado law.  However, if the money or property your inherit increases in value during your marriage and a divorce occurs, you may be required to split any increase in value with your spouse.  Likewise, if you commingle your inheritance with marital assets, you could turn it into “marital property” – also giving your spouse a claim to it during a divorce.   Understanding the law regarding marital property and inheritance can not only help you during your divorce case, but can also help you with structuring how you manage your property curing your marriage.

Is Inheritance Considered Marital Property in Colorado?

No, inheritance is not considered marital property in Colorado. Colorado statutory section C.R.S. 14-10-113 deals with the division of marital property in a Colorado divorce.  Subsection 2(a) specifically indicates that property received by gift or inheritance is not marital.  In light of this, inherited property is not subject division by the court and is not considered “marital property.”  Property not considered “marital” is considered “separate” in nature. While this is the general rule, statute and case law also support the notion that any increase to separate property during the marriage is marital in nature and up for grabs in your divorce.

Of course, property comes in many forms and how any increase in value is divided can depend on the nature of the property.   Firstly, a court cannot make someone hand over the property they received in the initial inheritance.  If someone inherits a home or other tangible asset, the court cannot make them sell that asset or give it to their spouse.  In such an instance, the court could award the spouse a monetary equivalent of their share of the increase, or perhaps offset their share with other marital property.

Dividing Property in a Divorce Case

If you and your spouse divorce, generally you will not have to divide the underling basis your inheritance with your ex-spouse. Section 14-10-113 of the law states that in a proceeding for dissolution of marriage, the courts will divide marital property equitably (fair and reasonably) based on the circumstances of the case.

The law defines marital property as everything acquired during the marriage, with a few exceptions. Again, one exception is property acquired by gift or descent. If your divorce case goes to court, a judge will have the jurisdiction to divide any properties, assets and debts you and your spouse acquired during the marriage. This can include cars, real estate, businesses, jewelry and collectibles.

A judge will divide property in a way deemed fair based on the circumstances, and can consider various factors, such as each spouse’s contribution to the acquisition of the property. This does not necessarily mean a 50/50 split or that the judge will automatically look at factors other than value and if the property is marital in nature.   A judge will not have the right to divide separate property, which is completely is safe from division.  A party claiming a separate property interest will usually have the burden of proving the separate nature of the property acquired during the marriage.   Thus, it is wise to retain all records should you receive an inheritance during your marriage.

What Happens If Inheritance Is Deposited Into a Joint Account?

Regardless of the general rule that the initial basis of an inheritance is separate property, the law may not protect you if your inheritance gets deposited into a joint account you share with your spouse. In this case, the inheritance has become commingled, meaning you have chosen to share it with your spouse and converted it into marital property. This is especially the case if you use your inheritance funds to pay for joint expenses, such as household bills.

The courts may then consider the inheritance marital property, making it subject to division in a divorce case. If you want to protect your inheritance during or after marriage by ensuring it is kept separate, do not deposit it into a joint account. Keep your inheritance in a separate account that is in your name only. This will prevent commingling and the risk of converting your inheritance to marital property.   If you’ve inherited real estate title it jointly with your spouse, that property will also lose its separate nature.

The same is true for other separate property, such as premarital investments, retirement accounts or other assets you wish to keep separate. Keeping your assets in a separate account can help protect them from division during a divorce in Colorado. Commingling your separate assets with marital ones can lead to headaches and litigation.  For more information about protecting your assets, consult with an attorney.

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Stephen Plog, co-founder of Plog & Stein, P.C. in 1999, is a dedicated family law attorney with almost two decades of expertise in Denver. Focused exclusively on family law since 2001, he excels in both intricate legal writing and courtroom litigation, having navigated cases in all Denver metropolitan area District Courts. Steve’s comprehensive background, including a Bachelor’s Degree in Psychology and a law degree from Quinnipiac University School of Law, underscores his commitment to providing insightful and personalized representation in family law matters.