Dividing the marital estate is a key aspect of any Colorado divorce. Spouses typically have to divide marital property and split up responsibility for shared marital debts. Couples either work cooperatively to settle financial matters on their own or present evidence to the courts for litigated asset division proceedings.
Regardless of which approach they pursue, there may be certain assets and debts that are not part of the marital estate. Some property may belong separately to one spouse or the other. Responsibility for certain debts may fall solely to individual spouses.
What financial obligations can spouses typically exclude from the marital estate?
1. Debts owed before marriage
Typically, the timing and intent behind taking on a debt matter more than the name on the account. Debts in the name of one spouse from during the marriage may be part of the marital estate if they took on the debt with the goal of improving household circumstances.
However, debts owed from before the marriage are typically the separate property of the spouse who already owed that money. Student loans and older credit card balances may be the separate responsibility of one spouse during a divorce.
2. Debts accrued due to dissipation
People sometimes intentionally waste money or destroy assets before a divorce. Their goal is to diminish the overall value of the marital estate.
Wasteful spending that is different from standard financial behavior during the marriage can constitute dissipation. Those last-minute shopping sprees before filing for divorce may end up being the responsibility of the spouse accruing the debt rather than both spouses.
3. Hidden financial responsibilities
Some divorces begin because of financial infidelity. Spouses may not honestly disclose their financial habits to one another. That behavior can undermine the trust between spouses.
If one spouse had a secret credit card that they use for gambling, undisclosed visits to a local bar or an extramarital affair, they may have sole responsibility for their furtive financial conduct. Those who intentionally misrepresent financial circumstances to their spouses and take on secret debts may ultimately be responsible for those amounts when they divorce.
Conducting a thorough review of financial circumstances can help people identify debts that should not be part of the property division process. Spouses who understand Colorado’s property division laws may be able to push for fair and reasonable divorce outcomes.
