Parties in a divorce tend to be very defensive about financial issues. A common statement made at the beginning of the divorce is “I made the money and supported this family so why should the other party benefit financially from my hard work?” The years of hard work, however, were during a marriage where it is likely the other party contributed either financially with their own income into the marriage or by their contributions to maintaining the household. The typical example is the corporately employed husband and stay-at-home mom. The husband does not understand why his wife of fifteen years would be entitled to any support by him after a divorce [see "Colorado Alimony Blog" on this site]. After all, he has worked the long hours to get where he is on the corporate ladder. He has contributed to “HIS” retirement fund with “HIS” income each month. The mother believes she is entitled to something for all the years she gave up her career opportunities to stay at home and run the household. The wife believes she should share in a portion of her husband’s income and retirement funds and she is correct under Colorado law.
Another common misconception deals with the grand old yearly tax return. When one party works and a tax return is received, that party typically thinks they are entitled to keep the entire return without sharing it with their spouse if their spouse was not employed outside the home. The statement “It’s “MY” money” is extremely common. Newsflash…it is marital property and you should plan to share the tax return in an equitable manner. The court does not care that only one party actually earned the income. The court assumes that both parties contributed to the marriage in different ways. If not for the stay-at-home mother it is likely the husband could not have achieved such a successful career. (And the roles are sometimes reversed with the husband being the homemaker.)
These are just a couple examples of the typical financial mindset people have coming into a divorce. The division of financial assets and debts that accumulate during a marriage can be a confusing and frustrating issue to deal with during a divorce. Everything related to finances that accumulates during the marriage is marital property and is subject to equitable division either by agreement or through the court. There are exceptions to this rule as there are a few ways in which to accrue separate property during a marriage. If one of the parties receives a gift or inheritance, for example, that may be that parties exclusive separate property that is not subject to division. Outside of a few exceptions, everything else is fair game. Spousal maintenance, division of tax returns, division of retirement accounts, etc., tend to be high conflict areas when it comes to the financial division of property. The best thing you can do for yourself is understand from the beginning that the court can and will divide these equitably. Of course what one person believes is equitable is different from the next. Pursuant to Colorado statute, a division must be made that is equitable, not equal. However, the reality of the situation is that more often than not, equitable does result in close to an equal division.
There are cases where one or both parties enter the marriage with large retirement or savings accounts, stocks, or other investments. These funds are separate property. The difficulty comes in where those accounts have fluctuated during the marriage and increased in value. For example, Sandra comes into the marriage with a $200,000 401(k). During the marriage the value of the account increases by $100,000. Sandra’s husband is now entitled to an equitable portion of the increase amount in Sandra’s account. Sandra, however, has the burden of proving she actually had $200,000 when she married her husband and that she did not mingle those funds with other funds or assets with her husband. Sandra needs to provide bank statements showing the account balances just prior to marriage and she may need statements during the marriage as well for different issues that might arise. The bottom line is that the burden of proving something is separate property lies with the person claiming it is their property. If you can’t prove it was yours before the marriage, it will likely be deemed marital property and the other party is entitled to their share as explained above.
Whatever your situation, do not go into the divorce thinking anything is black and white. Very few things are ever black and white and the law is certainly no exception. You may very well need an attorney to help you maneuver through the financial laws and to analyze your chances of proving any separate property claim.