Is Sick Leave Considered Marital Property in Colorado?

The Colorado Supreme Court recently decided an interesting issue for the first time. It looked at whether accrued vacation and sick leave is considered marital property during a divorce. In the case a husband and wife petitioned for divorce in 2007. The trial court divided the husband’s accrued unused vacation and sick leave, construing it as marital property.

The wife had submitted an exhibit during the divorce at the bottom of which she noted her estimate that the husband had accrued $23,000 worth of vacation and sick leave. The wife stated she would not ask for half of this sum if she could move to Florida with their kids. If she moved to Florida, she would leave the amount for the husband to use for visitation with the kids.

The court calculated that the husband had 452 hours of leave and sick time, which was worth $51.40 per hour or $23,232.80 in total. The husband’s pay stub did not indicate whether the accrued leave had a cash value. However, the husband was entitled to payment of the accrued leave if his job was terminated.

During the trial, the wife’s attorney asked the court to treat the leave not as an asset, but as an economic circumstance. However, a year after the hearing, the wife filed proposed permanent orders in which she requested that the court award her half of the accrued leave.

The trial court entered permanent orders permitting the wife to relocate to Florida. The judge also divided the vacation and sick leave, requiring the husband to pay he wife $11,616.00 for her half of this leave.

The husband appealed. He argued that the accrued leave was not marital property. A panel of the court of appeals reversed the lower court on this point, explaining that the accrued leave was similar to unvested stock options. It was not “property” that could be divided.

The court of appeals sent the case back to the trial court to reconsider the property division without included the vacation and sick leave. The wife asked the Colorado Supreme Court to review the case.

The Colorado Supreme Court explained that whether a particular asset is marital property is a mixed factual and legal question. In Colorado, section 14-10-113, C.R.S. (2013) of the UDMA requires the court to equitably distribute marital property after looking at factors such as the economic circumstances, the amount each spouse contributed and any change in the value of each spouse’s separate property.

In looking at whether a particular asset is “marital property” that can be equitably distributed, the court looks at (1) whether an interest is property and (2) whether it is marital or separate. If it’s marital property, the court must evaluate the worth of the property to distribute it.

The issue here was whether the accrued vacation was property under the UDMA. The Supreme Court explained that under Colorado case law, interests that are enforceable contractual rights are property under UDMA, whereas speculative interests are not. Accrued vacation and sick leave are a type of compensation. However, in certain cases, the value of leave is more speculative under an employment agreement or policy.

The Court concluded that where the value of leave can be ascertained and a spouse has an enforceable right to be paid for it under an employment agreement or policy, it should be divided as part of the marital estate. Where the value can’t be reasonably determined, the court must consider the employee spouse’s right to leave as an economic circumstance rather than an asset. In this case, there was no evidence that established the husband had an enforceable right to payment for leave, so the court of appeals decision ruling (not to divide the value of the leave) was affirmed.

If you are planning to divorce, it is crucial to have a knowledgeable Colorado family law on your side. Contact the experienced Denver family law attorneys at Plog & Stein.

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Gifts and Property Division During a Colorado Divorce, November 19, 2013
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