Frequently Asked Colorado Property Division Questions Part 2
- All the credit cards are in my wife's name. Can I be held responsible?
Though the Colorado property statute, C.R.S. 14-10-113, does not specifically address the issue of debt, Colorado courts are vested with the power to allocate or divide marital debt. Marital debt is debt accrued during the course of the marriage. Presuming debt was incurred for marital purposes, such as food, clothing, shelter, family vacations, or other true family-related purposes, the court will likely consider the debt marital and divide it equally or in some other "equitable" fashion.
Courts are not concerned with whose name the debt is titled in, but rather whether it was incurred during the marriage and the purpose for which it was incurred. If the debt solely in your wife's name was incurred for personal, non-family items, such as diamonds, furs, etc., the court would likely consider that debt to be her separate, or non-marital, debt. The Denver area divorce attorneys at Plog & Stein are ready to answer your questions related to marital debt.
- My husband and I have agreed to split my 401K equally. Will I be taxed for this?
401Ks and other retirement accounts are often divided as part of the divorce process. Generally, transfers of property incident to a divorce are not deemed to be a taxable event by the Internal Revenue Service. Retirement accounts, such as 401Ks and pensions are generally divided via what are called, Qualified Domestic Relations Orders (QDRO's to us attorneys). A QDRO is a specific order setting forth the terms of division of an account and will be signed off on by the divorce court judge prior to submission to the plan administrator. Providing the other spouse his or her share of the 401K through a QDRO will not give rise to tax, or penalty, consequences.
If one just pulls the funds owed out of the 401K without going through proper procedures, there will be potential tax or penalty consequences. When dealing with IRAs, funds can be rolled over from one account to another without tax or penalty. Again, just withdrawing the funds and paying them to the other spouse is another story. The experienced divorce attorneys at Plog & Stein can help with your Colorado property division concerns, including those related to retirement accounts.
- Can I get part of my wife’s inheritance?
Pursuant to C.R.S. 14-10-113(2)(a), property received by inheritance is generally considered separate and non-marital in nature. There are instances in which property received by inheritance can become marital, whether entirely or in part. The Denver divorce lawyers at Plog & Stein, P.C. are adept at analyzing each case to determine if such property has taken on marital attributes. Instances in which an inheritance received by one spouse may become marital will generally relate to whether the inherited property, all or part, has been ultimately titled jointly, or whether such property has increased in value.
For example, if one spouse receives $50,000 from her grandmother and subsequently puts it into a jointly titled bank account, there is a presumption that this property was intended to be made marital property via commingling it with jointly titled property. This is not an absolute rule and one can still argue that the separate inheritance amount is separable from the other funds in the account. This is going to be a question of fact for the judge to ultimately determine. This determination will likely include an analysis of deposits, withdrawals, and account usage from the time the inheritance funds were deposited.
Additionally, if that $50,000 is deposited into an investment account, which grows to $100,000 at the time of the divorce, the court will have statutory authority to divide the increase pursuant to C.R.S. 14-10-113(1)(d). When receiving an inheritance, one should always be careful to make sure he or she is aware of the ramifications that may flow from how the property is ultimately titled.
- Does marital property have to be split equally or 50/50?
The general rule of thumb followed by family law attorneys dealing with division of property in a Colorado divorce is that courts will usually divide marital property equally. However, pursuant to Colorado statute, specifically C.R.S. 14-10-113, Colorado judges are required to divide property in proportions they deem to be “just” in light of certain relevant factors. As such, judges have discretion in terms of how they might allocate property, so long as they find that the property is divided in a just or equitable fashion.
Though the easy thing for a court to do is to say all marital property shall be split equally, there are instances in which a court might allocate the assets on a 60/40 or differing basis. In light of the courts’ discretionary and equitable powers, judges might award a greater portion of property to one spouse due to a lower income level, a lesser likelihood of recouping assets, such as retirement proceeds, or in lieu of the other party being allocated less of the marital debt. Courts can also consider separate or non-marital property allocated to each party as a factor in formulating the equitable division of the marital property.
Furthermore, courts might also assess each party’s contribution to the accumulation of assets, including contributions made as a homemaker. Cases of disproportionate property division are few and far between, but they do arise. They key to remember is that a 50/50 division, though the norm, is not automatic.
- Does it matter whether the house and car are titled solely in my name?
No. Presuming either asset is marital in nature, C.R.S. 14-10-113(3) specifically indicates that all property acquired during the marriage, absent an exception, is presumed to be marital, regardless of whether titled jointly or separately. People sometimes title homes, cars, and various financial accounts solely in one party’s name for various reasons, such as due to poor credit. Additionally accounts, such as a 401K, are only going to be titled in the name of the plan participant. Colorado statute recognizes that property comes in many forms and titling mechanisms and that to divest one party based solely on how an asset is titled would be grossly unfair. The analysis regarding titling also holds true for marital debt.
Main Property Division FAQs