Frequently Asked Colorado Property Division Questions Part 3
- Can the court enter orders dividing or disposing of property prior to our permanent orders hearing?
Generally speaking, the final division of property is a permanent, or final, orders hearing issue. While a Colorado divorce case is pending, the court has power, pursuant to C.R.S. 14-10-108, to enter orders regarding the temporary usage of marital property. This is generally a decision made by a magistrate at a temporary orders hearing, or made by the parties via an agreement. “Usage” and actual disposition of property are two entirely different things.
However, pursuant to case law, specifically In re Gavend , 781 P.2d 161 (Colo. App. 1998), a court can enter orders regarding the sale or disposition of marital property prior to permanent orders in instances of extreme financial circumstances. For example, a court might order a home on the verge of foreclosure to be sold prior to the entry of final orders so as to preserve any equity for the parties. Aside from dire circumstances, the division of property will generally have to wait until the final hearing, absent an agreement of the parties.
- How will my pension be divided in my divorce case?
Pensions, more properly termed “defined benefit plans,” are retirement plans which pay out a monthly amount to the recipient at a specific age, as determined by the plan. Unlike a 401K or an IRA, pensions do not necessarily have a cognizable, lump sum value. Without a lump sum value, the division of a pension requires more analysis and work that just indicating, “the plan is worth $100,000; you get half or $50,000.”
The general method for dividing a pension in a Colorado divorce is the “time rule formula.” The time rule formula entails a calculation setting forth the following: years of service over years of marriage, times the marital fraction, times the amount to be received at the time the monthly pension proceeds are paid out.
With most pensions, the plan participant, or pension owner, cannot just access the pension funds for purposes of immediate division. As such, the time rule formula recognizes that funds may not be paid out for some time. The formula also recognizes that the years of marriage in which the pension is paid into may be less than the overall years of accrual.
For example, regarding facet one of the time rule formula, if a woman works for a company for 30 years, but is only married for 15 of that, the first portion of the formula would be 15 over 30, or 1/2. In most Denver area divorce cases, the marital fraction, meaning the portion of the marital portion of the plan to be received by the other spouse, will generally be .5 or one half.
The general rule of thumb for marital property division is that courts divide property equally. In recognition of the fact that pensions may not be paid out for many years, the time rule formula looks to what is being paid out at the time of retirement, a figure that is not necessarily going to be known at the time of divorce. Using the figures above, and assuming a hypothetical retirement date payout of $1,000 per month, the formula would be 1/2 x 1/2 x $1000, or $250 per month to be paid out to the spouse.
With the formula, the fact that the other spouse gets a portion based on dollars at the time of retirement is balanced out or accounted for, from a fairness standpoint, by the fact that the first fraction goes down with continued, or premarital, years of service. Thus, there is an actual segregation of the non-marital portion of the pension. The actual formula will be put into a document called a Qualified Domestic Relations Order, which directs how to specifically divide the plan at the time of retirement.
- Is property obtained after separation all mine?
A common misconception held by people prior to speaking to an experienced Denver family law firm is that once a divorce case is filed, or the parties are physically separated, any property acquired or value accrued between that time and the time a decree is entered belongs to the party acquiring such. The same misconception is often applied to debt as well. C.R.S. 14-10-113 deals with the allocation of property in a Colorado divorce case and indicates that property is divided at the time of decree. Statute indicates that property be divided equitably, meaning that the judge has discretion as to the division. There is no automatic rule regarding property acquired during the divorce proceedings, or in a general sense.
In some metropolitan area courts, a case can take several months. If, during that time, one party’s 401K goes up significantly, most judges will factor that increase in as marital property and it will be subject to division. This is not to say that arguments cannot be raised suggesting that new property or increases in value to current property should not be divided. Any such arguments will need to be compelling to the court from a fairness standpoint.
- Does my wife get part of my Social Security when we divorce?
The answer to this question is both yes and no. Social Security benefits, though similar to retirement benefits, are not considered property, but rather income. That being said, in situations where the parties to a Colorado divorce have been married for 10 years or more, a divorced spouse may elect to draw Social Security benefits based on the payment received by their former spouse, which can be half of the payment received by that former spouse.
For example, if the wife receives $2,000 per month in Social Security benefits, the former husband can elect to receive $1,000 per month. This will generally be done when that $1,000 is more than what the husband would receive in Social Security based on his own earning history. Fortunately, when one spouse elects to draw Social Security based on their former spouse’s monthly benefit amount, the proceeds received by that spouse in no way affect the second spouse. Though Social Security benefits are not property, looking at what those benefits may be can be important to both assessments of how to divide retirement property, as well as might relate to alimony.
- Can the court give my house I owned before the marriage to my husband?
The answer to this question depends on titling. If the wife owning the home prior to marriage has not made the mistake of jointly titling the home in her husband’s name, the home should be considered separate property pursuant to C.R.S. 14-10-113, the statutory section dealing with allocation of property in a Colorado divorce. As such, the court should not forcibly give the house to the husband in this scenario. However, this is not to say that the husband may not be entitled to some compensation related to the home. If the house in question has increased in value during the marriage, the general rule of thumb is that the increase is marital in nature. As such, the court can order the increase in equity during the marriage be split between the parties, which will generally be done equally. Your Denver divorce attorney can assist you in assessing how your house will be dealt with by the court, regardless of titling. With the improved housing market over the last two to three years, real estate has returned to the status of something worth fighting for.
Main Property Division FAQs