Finding a compromise with a soon-to-be-ex spouse is not always easy. Notably, that's the case when financial assets are involved. When uncontested divorce is not an option for either party, it is the court who will decide on the division of marital assets.
While the division of property may vary by state, in Colorado Divorce Law, the operative term is "fair and equitable." Many people believe that this means a 50/50 split of assets and debt, but that is not always the case. In a legal sense, "fair and equitable" takes into account the unique circumstances of each spouse, as well as how the marital assets and debts were accumulated.
The Three Common Options for Asset Division
Most couples going through a divorce usually go through a cascading flow of the final determination of property division.
First, both parties can sit down and divide up all the assets and debts. The reached agreement is signed by both spouses and becomes a part of the Dissolution Decree. This is the best-case scenario as it avoids litigation.
If the parties cannot agree, the next step will be to use a mediator or arbiter who will take the couple through a negotiation process. In terms of costs and emotional toll, this is the next best solution you can pursue.
Finally, if the parties still cannot agree, they must go through litigation. In this case, the court will make the division determination, and the resolution will involve attorneys’ fees and court costs.
What Happens When the Court Steps in for The Division of Assets
Remember, the "fair and equitable" approach used in Colorado does not mean equal. The court will consider the following circumstances when making the decision:
- The individual financial status of each spouse. For example, during the marriage, one spouse may have been the primary provider of income, while the other stayed at home or earned a much lower income. This will figure into any division.
- Increases (or decreases) in shared assets and debt during the marriage. Such cases can get very tricky. For example, suppose one spouse inherited a sum of money and placed it in a separate account. The other spouse, however, also made deposits into that account. Or the investment from an inheritance resulted in an increase in that asset during the marriage. In such instances, seeking qualified legal assistant will be highly valuable.
- When one parent gets custody of the children, that parent may wish to retain the family home. The court will then require to determine what portion of that home’s equity should belong to the non-custodial spouse.
- Was there a dissolution of separate property during the marriage for the sake of that marriage? For example, suppose one spouse cashed in a separate premarital retirement asset for the couple to meet other financial obligations? What is fair for that spouse now? That ruling will be made by the courts as well.
In general, the court will have to decide to separate and marital assets and debt and make decisions accordingly. In the course of litigation, a judge will assign a value to all assets and liabilities before deciding on fair and equitable division.
The Best Way to Approach Asset Division
Even if you and your spouse are amicably dividing up assets and debts, you still risk an agreement that is not fair and equitable. You need to have an attorney on board to review any arrangements you have so that you can be confident that your best interests are being protected.
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