Gifts to the Marital Estate & Depletion of Separate Property | Episode 90

Gifts to the Marital Estate and Depletion of Separate Property in Colorado Divorce

In this episode of Divorce at Altitude, Ryan Kalamaya explains two critical concepts in Colorado divorce law: Gifts to the Marital Estate and Depletion of Separate Property. Using the hypothetical example of Eric and Melanie Wolf, Ryan walks listeners through how property, such as a house or inheritance, is treated during divorce.

Ryan covers how property that was originally separate, like Eric's house or Melanie's inheritance, can become marital property based on how it is treated during the marriage. He discusses the common scenario where separate property is converted into joint property and how the court views this as a gift to the marital estate.

On the flip side, Ryan also delves into what happens when separate property is depleted—like in Melanie's case, where her $5 million inheritance is spent during the marriage. He explains how Colorado law factors the depletion of separate property into the division of marital assets and the financial implications for each party.

This episode offers insights into how courts handle property that starts as separate but gets intertwined with the marital estate, providing valuable advice for anyone navigating a divorce involving mixed assets.

Episode Outline

Gift to the Marital Estate
How separate property, like real estate or family money, becomes marital property when jointly titled or used for marital purposes.

Examples of Gifts
Real estate and family gifts treated as marital property in a divorce.

Depletion of Separate Property
How spending separate property, such as an inheritance, affects the division of assets.

Legal Treatment of Depleted Property
Colorado law’s view on depleting separate property and its impact on divorce outcomes.

Key Differences Between Gifts and Depletion
Distinguishing between converting separate property to marital property and spending it during marriage.

What is Divorce at Altitude? 

Ryan Kalamaya and Amy Goscha provide tips and recommendations on issues related to divorce, separation, and co-parenting in Colorado. Ryan and Amy are the founding partners of an innovative and ambitious law firm, Kalamaya | Goscha, that pushes the boundaries to discover new frontiers in family law, personal injuries, and criminal defense in Colorado. 

To subscribe to Divorce at Altitude, click here and select your favorite podcast player. To subscribe to Kalamaya | Goscha's YouTube channel where many of the episodes will be posted as videos, click here.  If you have additional questions or would like to speak to one of our attorneys, give us a call at 970-429-5784 or email us at info@kalamaya.law.

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DISCLAIMER: THE COMMENTARY AND OPINIONS ON THIS PODCAST IS FOR ENTERTAINMENT AND INFORMATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROVIDING LEGAL ADVICE. CONTACT AN ATTORNEY IN YOUR STATE OR AREA TO OBTAIN LEGAL ADVICE ON ANY OF THESE ISSUES.

Transcript

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Ryan Kalamaya (1s):
Welcome to Divorce at Altitude, a podcast on Colorado family law. I'm Ryan Kalamaya each week, along with my business partner and cohost Amy Gosha or an expert, we discuss a particular topic related divorce or co parenting in Colorado. In addition, we have created a short series of lessons that will take you through the legal process of divorce and answer your questions from simple to complex divorce. Isn't easy. The end of a marriage, especially when children are involved, brings a great deal of loss and change. We hope these practical tips and insights will help you On your journey to a new and better life.

Ryan Kalamaya (42s):
This how to episode is about Gifts to the Marital Estate and Depletion of Separate Property. Now these are two separate, but often interrelated legal concepts. And in order to understand each of them and how they work, I'm going to be relying on our hypothetical divorce story involving Eric and Melanie Wolf. If you're unfamiliar with their stories, you can find them on our website. You can search their names in my last name and find them online. You can also listen to episode one, which is Eric Wolf's story. You can also listen to episode 70, which is Melanie Wolfe's divorce story. So let's first tackle Gifts to the Marital Estate. And let's assume that Eric Wolf owns some sort of house in Boulder, Colorado, and he owns it.

Ryan Kalamaya (1m 28s):
And it's individually named and they Melanie and him get married. That house is going to be Separate Property, but let's assume that he jointly titles it, and it might be for estate planning purposes, or it might be just because it's the family house. And he feels as if it should be jointly titled what happens in the divorce when he then later claims, well, that's my Separate Property. I own that at the point of the marriage, well pursuant to a marriage of finer and some other Colorado cases, the court is going to consider his conversion into jointly titled property to be a gift to the marital estate. So that house will be deemed marital property.

Ryan Kalamaya (2m 8s):
Does that mean that necessarily, that it will be divided equally? No. If you won't listen to episodes 56 on Property Division, episode 58 on marital and Separate Property or episode 61, you can learn more about how a court might approach that. But oftentimes what Eric will argue is that he should get some sort of contribution or money off the top for his contribution to the marital state. And it might be a disproportionate contribution to the marital estate. Another example that we see within Gifts to the Marital state is Eric might receive some money from his parents for example, and he would use that to purchase a house and use it for a down payment on the house.

Ryan Kalamaya (2m 51s):
And then once he realizes, and once I tell him that it's presumed to be a gift to the marital estate, he'll then say, well, that wasn't a gift. It was actually alone and go back retroactively and try to paper it up as alone. And we'll have a separate episode on inter-family loans and the difference between gifts and loans. But for now you should understand that the court is going to consider that generally speaking to be a Gifts to the Marital Estate. And it often happens frequently in real estate. So let's compare that to Depletion of Separate Property. Now, let's assume in this scenario that Melanie was the beneficiary of a trust that was contingent on her grandfather's life.

Ryan Kalamaya (3m 35s):
And her grandfather passes away five years before Eric and Melanie go Splitsville and they engage in divorce, the divorce process, and she inherited $5 million. And as soon as she inherited that money, her and Eric just really turned up the notch on their lifestyle and they purchased a bunch of stuff and they went on vacations and that $5 million, which under Colorado law, which would have been Separate Property, then becomes $2 million because Eric and Melanie spent a considerable amount and it could have been to pay off debts, marital debts. It could have been for their lifestyle. How is that different than The gift to the marital estate?

Ryan Kalamaya (4m 16s):
Because there's no money left over in the scenario of Melanie spending her Separate Property. How is that treated in Colorado law? Well, it's a factor under 14, 10, 1 13, the statue on property in terms of how the remaining marital estate is divided. And again, you'll need to go back and you can listen to other episodes to understand the concepts of marital and separate property, but you can also get into a long form episode, episode 29 on Proving Separate Property, what and tracing, but it's a different legal concept. And they often come into play when people bring property in from either inheritance or before they are married and they can either deplete it in the case of Separate Property and Melies scenario, or they can have a Gifts to the Marital of state and each party will have their respective arguments on how that should be treated.

Ryan Kalamaya (5m 14s):
But for now, hopefully that gives you a better idea on the difference between Gifts to the Marital Estate and Depletion of Separate Property. Thanks for listening or watching this short lesson on the Divorce at Altitude podcast. If you found this helpful, please leave a review or share with a friend. It does help for others that are going through or thinking about a divorce in Colorado. If you want to find out more information, please visit Kalamaya dot law or Divorce at Altitude dot com. And that's K a L a M a Y a.law. Remember, this is educational information. It's not intended to be legal advice. Please consult with an attorney about the particulars of your case.

Ryan Kalamaya (5m 56s):
We're happy to answer questions. Feel free to give us a call at (970) 315-2365.