Divorce at Altitude: A Podcast on Colorado Family Law

Marital and Separate Property in Colorado | Episode 58

October 04, 2021 Ryan Kalamaya & Amy Goscha Season 1 Episode 58
Divorce at Altitude: A Podcast on Colorado Family Law
Marital and Separate Property in Colorado | Episode 58
Show Notes Transcript

Ryan Kalamaya discusses the difference between marital and separate property in the situation of Eric Wolff's hypothetical divorce situation.

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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. 

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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.

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 episode is on Marital and Separate Property. Now, instead of me talking in strictly abstract legal concepts, I'm going to be using an example from our Eric Wolff, hypothetical divorce client. And if you don't know that story, then go back to episode one of this podcast and give it a listen or watch online to familiarize yourself with Eric and Melanie Wolf's story. You can also find it on our website by Googling my last name and Eric Wolff, and you should be able to review it. But in general, marital property is all property acquired after the parties are married. So in our Eric and Melanie Wolff example, if Eric acquired a house after the parties were married, then that is generally presumed to be Marital.

Ryan Kalamaya (1m 30s):
So what exactly is separate property? Well, again, in general, separate property is property that was owned before the parties are married or acquired during the marriage by gift or inheritance. The core in Colorado only has jurisdiction or the ability to divide marital property. So what is separate and marital property is really important. Let's talk about an example of how important the determination between Marital and Separate is in Eric and Melanie Wolfe's divorce. If Eric Wolff owned property, that was worth a million dollars, and he acquired that before the parties were married. Let's say, it's the day before they're married.

Ryan Kalamaya (2m 10s):
Then that is considered to be separate property. If however, he acquires that million dollars while they're on their honeymoon the day after their marriage or wedding, that is presumed to be Marital. So if the court were to divide marital property in Eric and Melies divorce equally, that is a difference of $500,000 going to Melanie in the situation where it's marital property compared to nothing. If it was acquired a day before their wedding and is considered to be separate property. So is that it is the court just looking at what is separate property in Marital? Well, not exactly Colorado is fairly unique from other states in that it considers appreciation on separate property to be Marital.

Ryan Kalamaya (2m 58s):
So going back to our example of the million dollars, if Eric acquired a million dollars the day before the wedding, that million dollars is considered to be separate. Well, let's say he invests that million dollars in the stock market and the parties are married for 20 years. And now when we're looking at a divorce, that million dollars has grown to two and a half million dollars. What happens then in that example, a million dollars in simplistic terms is set aside as Eric's separate property, the one and a half million dollars of appreciation during the 20 years, that is considered to be Marital. You can run the numbers and see what the impact is.

Ryan Kalamaya (3m 38s):
If you equally divide that one and a half million dollars. Now let's talk about tracing separate property. I've already used the word in general or the term in general, multiple times in this episode. And that is because the law regarding Marital and Separate Property is fairly complex and nuanced. And it's far more, there are these exceptions to the general rules that I've covered that are beyond the scope of this episode. But what they do is they give rise to these general rules. Again, one of them is that property is presumed to be Marital. Another rule in general is that the party claiming separate properties. So Eric Wolff, when he's asking the court to consider that million dollars to be separate property, he has the burden of proof to show that that property was owned before he was married and it was worth a million dollars.

Ryan Kalamaya (4m 30s):
And he has to show that by a preponderance of the evidence, a final rule that you should be aware of is that that million dollars can change over time. And if Eric jointly titles that property, he's deemed to be gifting that property to the marital state. So if that million dollars is a house and it was in his name, and then he jointly titles the house during the marriage for estate planning or other reasons that house is deemed to be marital property, all of it. But these general rules give rise to a concept of tracing. So what do I mean when I say tracing separate property? Well, remember when you were a little kid and use to connect the dots, to complete the whole picture in a coloring book, think of it that way.

Ryan Kalamaya (5m 15s):
Tracing separate property is an accounting term that describes the process of tracing a Separate asset as it changes in both character inform as well as value over time. So going back to, in our example of Eric Wolf's million dollars, if that million dollars was owned before the parties were married and it was invested in three different stocks, Microsoft GM, and Boeing, and then over time, Eric Wolff sells the GM stock and invest it in Tesla and sells Boeing and invest it in Netflix. We're going to have to trace that those individual stocks over time. What if Eric sells his stock and goes and buys a rental property, or he goes and buys a business?

Ryan Kalamaya (5m 59s):
What happens then? These are the sorts of examples that can really get complex when we're talking about Separate and marital property, because there are various legal concepts that are in play. If you want to find out more information, go back and watch our episode in which I interview Andy Baum about tracing separate property in one of our full length episodes on this podcast. As you can see tracing separate property, and the difference between Marital and Separate Property are very nuanced and complex. You should consult an attorney if you're dealing with these sorts of concepts, but for now, hopefully that helps you understand the various concepts that are at issue when talking about Marital and Separate Property.

Ryan Kalamaya (6m 41s):
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 unforeseen Colorado. If you want to find out more information, please visit Kalamaya Law or Divorce at Altitude dot com. That's kalamaya.law. Remember, this is educational information. It's not intended to be legal advice. Please consult with an attorney about particulars of your case. We're happy to answer questions. Feel free to give us a call at 970-315-2365.