3 types of property that don’t get divided in a divorce
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3 types of property that don’t get divided in a divorce

On Behalf of | Mar 29, 2023 | Property Division |

How couples choose to divide their property has a lasting impact on their financial circumstances after divorce. Married couples typically live in the same house, use the same bank accounts and share their income with one another. That cooperative approach to household needs improves both spouses’ standard of living during a marriage, in most cases.

However, sharing resources can lead to a lot of challenges when people decide to divorce. Colorado’s equitable distribution law requires that couples look for a fair way to share their assets when they divorce. However, only marital property is subject to division. Some assets are categorized as separate property that couples don’t have to divide. The three types of property below are generally considered to be separate property that isn’t subject to the asset division process during a Colorado divorce.

1. Resources protected in an agreement

Prenuptial agreements have become more common in recent years, as many people recognize the value of having a clear plan in place if they ever divorce. Postnuptial agreements have also become increasingly common, as people recognize later in marriage that they may be vulnerable in certain ways. Property designated as separate in a marital agreement will typically not be part of the marital estate that couples must divide when they divorce.

2. Inherited property or gifts

The surviving children of an adult that dies will often inherit a significant portion of their estate. Even when the beneficiary of the estate is married, their inheritance can still be separate property for the purposes of divorce proceedings.

The same is true of gifts received both from a spouse and from other parties during the marriage. Commingling an inheritance by putting it into a shared account or giving a spouse control over it may also give that spouse a partial claim to those assets in the divorce.

3. Resources from before the marriage

If someone owned their home or started a business before marriage, then they could treat that property as separate in a divorce. However, commingling is an issue with pre-existing property just as it is with retirement assets. One spouse might perform uncompensated work at a family business or help pay the taxes on a property someone owned before the marriage.

Oftentimes, those who are contemplating divorce will need to very carefully review their financial records to determine which assets they can treat as separate and which property they will need to treat as part of their marital estate. Understanding the rules that apply to asset division in Colorado divorces can help people to more effectively advocate for their financial future during divorce with the assistance of an experienced legal professional.