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Commingling might convert separate property

July 15, 2022 | Asset Division, Firm News

Colorado is an equitable distribution state. According to Colorado Legislature 14-10-113, the courts attempt to divide marital property according to various relevant factors, not including marital misconduct.

One of the factors that courts consider is the contribution of each spouse to the marital property. If a spouse has any involvement with a property that the other spouse believes is their separate asset, it may become marital property in the eyes of the court. Mixing individual and marital property, or commingling, might have severe consequences for the outcome of a divorce.

Unknowingly mixing property

Generally, the spouse who commingles their property loses out, while the other spouse benefits. The reason is that more property becomes available for division. Usually, the commingling spouse does so without realizing it. For example, the spouse might receive an inheritance that generally counts as separate property. However, if they deposit the money into a joint account with the other spouse, the courts might see this as marital property.

Improvements that benefit the marriage

Another way spouses commingle their property is through common use. If you purchased property before you married, you might believe it is separate. Yet, if you let your spouse use the property or improve it to benefit your marriage, they might attempt to claim it as marital property.

Unfortunately, many people unknowingly commingle their assets. As a result, the loss of their property comes as a shock. Couples with significant assets should strongly consider postnuptial agreements in the event of a divorce. Even without a postnuptial, understanding the property division process helps to prepare for a complex divorce.

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