How the Division of Marital Property is Decided
For better or for worse, the division of marital property has nothing to do with how one of the partners conducted themselves during the marriage or whether their actions could be considered faulty. Remember, Colorado is a “no-fault” state, and along with that classification comes the view of the courts that all marital property must be divided equitably.
The main determinant of how the property gets divided is based on each individual’s contribution to the acquisition of the assets. As you can imagine, this evaluation is highly subjective. It can become contentious, especially in the case of assets that are not easily liquidated, hold sentimental value to both parties or are difficult to ascertain the monetary of credibly.
A family law attorney is necessary in unraveling these more complex situations. In the case of the homemaker described above, an experienced attorney will be able to make certain that he or is she treated fairly in the division of the assets. In turn, if the so-called “breadwinner” made extreme sacrifices to provide for the family, that additional effort must be argued.
If one or both partners owns a business, then a business valuation must be performed as well. The situation becomes infinitely more complex if business partners with ownership stakes or equity are involved. In cases such as these, drafting a prenuptial agreement before getting married can take the negotiation out of this process and ensure a more well-intended outcome.
What Happens to My Property Rights if I Move out of the House?
This question is one of the most frequently asked as a couple begins divorce proceedings. Though being in a separate home may be the best thing for you, your partner, and any children, the person who leaves the marital home often discovers later that they have lost some legal rights, especially in terms of child custody.
To prevent this from happening, consult with a family law attorney first. Parents can agree in advance that living apart won’t affect anyone’s future legal rights, though this sensitive matter is best handled by an objective third party.
Separate Versus Marital Property
Property is classified as separate or marital property. Separate property, such as inheritance and some gifts, are not divisible at the time of the divorce if handled properly. Marital property is property acquired during a marriage no matter how it is titled or paid for. Appreciation in value of separate property is also included as marital property. The attorneys at Dailey Law, P.C. will assist you in classifying your property and preserving your separate property.
Division of Business Interests
Businesses come in many different forms and are considered property for purposes of divorce. Dailey Law, P.C. has extensive experience with many cases involving different business entities including professional practices, closely held corporate and family businesses, and real estate. Common options to divide a business are to sell the business or have one spouse retain ownership; the law does not generally favor divorced spouses remaining in business together. If you elect to sell the business, you will probably need to retain a business appraiser. The standard of value of a business for purposes of divorce may be quite different than fair market value or value for other purposes. Dailey Law, P.C. has experience working with business consultants and appraisers and will help you select the best expert for your case.
The Family Home/Marital Residence
Many people want to retain ownership of their marital residence for the benefit of minor children to retain some stability in what can be a stressful time filled with uncertainty, but it may not be the best financial option depending on your circumstances. Special consideration should be given to the amount of money needed to pay the monthly mortgage and maintain the home. If you plan to sell the home relatively soon, you will want to be sure to consider the costs of sale, including cost of necessary repairs, real estate sales commission, title insurance, and other fees. If you elect to sell your home, it does not have to sell before the divorce is final. If you elect to retain the home, be aware that you will most likely need to refinance the mortgage, if jointly held, into your name alone. The attorneys at Dailey Law, P.C. will help you evaluate your options regarding your marital residence.
Personal Property/Household Goods
Most people are able to agree on the division of their household goods without having to agree on the value of each and every item. If you are unable to agree, Dailey Law, P.C. will advise you of different options that have worked for other clients in the past.
Retirement, Pension, and Profit-Sharing
There are many different types of retirement plans. The two most common are defined benefit and defined contribution plans. Defined benefit plans include pensions, Civil Service Retirement System, Military Retirement, Federal Employee Retirement System, Railroad retirements, and many municipal and state employee plans. These types of pensions usually pay based on your earnings and the number of years that you worked for the company. If the pension will be divided between spouses, it’s critical that there is life insurance or survivor benefits in place to protect the nonemployee spouse.
Defined contribution plans include PERA, IRA, SEP, 401k, Profit Sharing, ESOP, Tax- Sheltered Annuities, Money Purchase Plans, 403(b), and TIAA-CREFF. You, as an employee, contribute to the plan and the employer may or may not match your contribution.
The attorneys at Dailey Law, P.C. will assist you in determining the nature of the retirement benefits in your case and the various methods to value and divide these interests.
Stocks, Bonds, and Securities
Investments are valued as of date of divorce. The value of these types of assets may fluctuate significantly while your case is pending. It’s important to review the value as close in time to the actual divorce date as possible and to address how changes in value will be handled from the date of your order to the date of distribution.
The cash value of a whole life insurance policy is an asset for purposes of divorce. Typically, the cash value is the value of this asset and not the surrender value. Term insurance is not considered an asset for purposes of divorce but is often used to secure a future stream of income such as maintenance or a pension benefit that is not otherwise secured. Dailey Law, P.C. assists clients in calculating the amount of insurance needed to provide adequate security.
Allocation of Debt
Your final order or agreements need to specifically state which spouse is responsible for which debt. It’s usually advisable to obtain a credit report early in your divorce so your list of consumer debt is complete. Be aware if a credit card is jointly titled, and that even if your spouse is obligated to pay the debt, the creditor has a legal right to pursue payment from you. The attorneys at Dailey Law, P.C. will recommend specific language to protect your interests related to debt payment.
Will I be Obligated to Pay my Spouse’s Student Loan?
This depends on when the loan was incurred and how the monies were spent. If student loan monies were used for family living expenses, it is very likely the debt, or a portion, will be considered a marital debt. The attorneys at Dailey Law, P.C. will assist you with the evaluation of the best options available for you regarding student loans.
Taxes on the Division of Marital Assets
Division of assets between spouses at the time of divorce is not a taxable event if handled properly at the time of divorce. Certain assets, such as rental properties, retirement and investment accounts may generate significant taxes that need to be considered as part of achieving an equitable final division. The attorneys at Dailey Law, P.C. have substantial experience with tax issues related to the division of property and will help you structure a final agreement that avoids hidden taxes.