One of the most complex aspects of a Colorado divorce is determining how to divide assets and debts. Divorcing spouses can reach their own agreement regarding the division of assets, but if they’re unable to do so, a family court judge can apply Colorado property division laws, which may consider the transmutation of property.
Colorado Property Division Laws
Under Colorado law, divorce courts divide property equitably between the spouses. This does not necessarily mean equally. Courts can consider various factors when determining what is equitable, such as their separate property, earning capacity, and child custody arrangements.
Marital property is subject to equitable division during divorce. Marital property is generally any property that either spouse accumulated or earned during the marriage, regardless of how it is titled.
Separate property is generally any property that either spouse owned individually before the marriage, property obtained as a gift or inheritance, property obtained via a valid marital agreement, or as proceeds from separate property.
What Are Transmuted Assets?
Transmutation occurs when a spouse’s separate property is changed into marital property. This most often occurs when marital property and separate property are commingled. Comingling occurs when marital and separate property are mixed together, making it impossible to distinguish between them. For example, if a spouse uses their inheritance to purchase the marital home, these assets may be commingled.
Transmutation can also occur when a title or deed changes the form of ownership. Assets can also be transmuted from marital property to separate property through similar mechanisms, as a contract, or as a gift.
Legal Effect of Transmuted Property
Any property that is considered marital property can be subject to division during the divorce. If separate property was transmuted into marital property, it can have a significant impact on the divorce’s outcome.
Preventing Transmutation
Fortunately, you may be able to prevent transmutation and the commingling of your separate property, ensuring it’s not part of the property division process during divorce. Here are some tips to help you prevent transmutation:
- Keep separate property separate. Avoid commingling separate funds or assets with marital funds or assets. It might be more complicated, but it can help you avoid this problem.
- Keep good documentation. Track how you accumulated an asset and how the asset was used during your marriage. Write down details regarding any gifts or inheritances you received. Record the asset information, such as purchase date and title information.
- Make a plan. Use your estate plan to reinforce your right to your separate property and how it will be managed in the event of your incapacity or after your death.
- Do not treat separate property as marital.
Contact Us Today to Speak with an Experienced Property Division Lawyer
It might become necessary during your divorce to prove that your assets are separate. A complex property division attorney with Stahly Miner LLC can help you argue your point and prove the validity of your claims. Contact us to schedule a confidential consultation by calling (303) 797-2900.