Frequently Asked Colorado Property Division Questions Part 1
- My husband owned his house prior to the marriage, what are my rights?
The first question the Denver divorce attorneys at Plog & Stein, P.C. would ask is how long the parties have been married and whether the husband had titled the property in both names? Assuming the house remained titled solely in the husband’s name, the marital equity in the home would be any equity that accrued between the date of marriage and now. That portion of the equity in the home would be subject to division.
Because the house was husband’s pre-marital property, the court could not award it to the wife or order it to be sold. However, the court could certainly order that wife get her share of the marital equity, generally half, through other means. This could include orders indicating that husband must pay her a certain amount of money or orders giving her a greater share of other marital property to offset her share of the equity.
If husband elected at some point during the marriage to put wife onto the title, there would be a strong argument that the house was a gift to the marriage and became wholly marital property. In that instance, wife would arguably be entitled to her share of all of the equity, not just that which accrued during the marriage.
- How will a court divide the household furniture and items?
One aspect of property division in Denver that most metropolitan area courts loathe dealing with it is furnishings, the pots and pans, etc. Most married couples do not have Picasso paintings or 17th century antique furniture. The general rule of thumb the Denver family law attorneys at Plog & Stein go by is that clients should really try to work out dividing the furniture on their own.
It is not uncommon to hear judges say that they will just order the parties to have a garage sale, sell it all, and split the money. This benefits no one. Furthermore, the cost of replacing these items will far exceed the funds gained through a garage sale. As with other property, from a valuation standpoint, the purchase price of an item of furniture is not the current value. Court’s go by current value, not purchase price. Current value will generally be garage sale value. Parties should keep in mind that pre-marital items and gifts from others are not part of the marital furniture to be divided.
Additionally, if one party is going to keep a piece of property that is being financed, such as a bedroom set, they should also expect to be solely responsible for any debt on that furniture. The method our attorneys suggest is that the parties inventory the entire house for all marital property, make a list, and take turns choosing items. This may seem tedious and unpleasant, but it is much more practical than being ordered to sell it all. Some judges will order an inventory/choice process. There is no set rule for dividing up the furniture and if the parties cannot agree, the court will ultimately decide.
- My wife filed for divorce, can I drain my 401K to keep her from getting it?
It is common for people facing a divorce in Denver to want to protect their property. However, once you file for divorce or are served with divorce papers, there is an automatic injunction in place, pursuant to C.R.S. 14-10-107, which prohibits the hiding, concealing, encumbering, or depleting of marital assets while the divorce is pending, except in the normal course of business or for the necessities of life. Thus, if you have been served with divorce papers, you cannot just go drain a 401K or similar account. The other side will find out through the financial disclosure process and one can find himself or herself in trouble with the court.
If the funds are drained or squandered, the court will likely still make that party responsible for paying the other party his or her share of the funds. Thus, draining the account makes no sense. Additionally, even if the 401K was drained prior to the divorce being filed, if it was done unilaterally and without consent of the other party, the court may still award the other party his or her share of the funds under a theory of marital waste or asset dissipation. Hiding assets or disposing of them to avoid property division in a divorce will generally backfire. Attorneys know how to chase the money and there is almost always a paper trail.
- My boyfriend and I have split up and have a custody case, can the court divide up our property?
As custody attorneys in Denver, we are often asked this, or similar, questions. The answer is, “No.” Courts in Colorado custody cases do not have jurisdiction over the property of the parties in custody cases, only over child issues. As such, if the parties are not married, they will need to file a separate civil action to deal with their property concerns.
- How will the court deal with dividing my husband’s business?
As with other items of property in a divorce, businesses are also considered assets subject to division. Contrary to common belief, there is more to determining the value of a business than just calculating the assets and liabilities. Rather, in a Colorado divorce case, generally businesses will be valued through the assistance of an expert, usually an accountant with training in business valuations.
Beyond looking at just the assets and debts of the business, the valuator will also analyze the income stream for purposes of arriving at additional value, generally related to "goodwill." It is not uncommon for each side in a divorce case to have his or her own business valuator, though sometimes the parties initially use one joint expert. Of course, other rules applicable to the division of property in a divorce apply, such as whether part or all of the business was pre-marital.
Assuming there is marital value to the business, the court can either offset the other party's share with other marital property, arrive at a figure owed by the party keeping the business in terms of what he or she needs to pay the other, or order the business sold. Parties to a divorce should keep in mind that the valuation is not just a simple balance sheet. Parties should also keep in mind that in this economy, our attorneys see once thriving business now heavily laden with debt and diminishing income streams. The attorneys at Plog & Stein can help you further analyze the ins-and-outs of your business assets and whether a valuation is needed or worthwhile in your divorce case.
Main Property Division FAQs