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Avoid commingling - Protect your separate property from divorce

Divorce comes with a slew of complicated questions you will have to answer and decisions you will have to make. What type of custody situation will benefit your children but still be manageable for both you and your future ex-husband? Which one of you will get the main residence in Denver? What happens to your retirement accounts?

Colorado, like most states, follows the principles of equitable distribution when it comes to dividing marital property. This means that if you allow a court to divide the marital party, it will do so in a way that it deems as fair. However, keep in mind that fair does not necessarily mean even. This treatment usually only applies to property that you acquired during the course of your marriage.

Property that is not subject to equitable division is separate and will remain with the individual that brought it into the marriage. In general, separate property includes anything you already owned when you said your vows as well as gifts and inheritances you may have received even after your wedding day.

Does this mean that the inheritance you received from your father several years ago is safe from your divorce? As with the answer to most legal questions, the answer is maybe. Read further to find out how you can protect your inheritance from divorce.

No commingling

The key to protecting separate property during a marriage is to truly keep it separate. For example, upon receiving the inheritance, it should be kept in a separate bank account. Furthermore, you should never deposit any fund that might be marital in nature in the account. This includes any income you earn while you are married. If you deposit marital funds into the account or use any of the inheritance to purchase property that lists the two of you as joint owners, it may very easily lose its separate status. It will then be subject to Colorado's marital property division laws and your husband could walk away with a portion of your inheritance.

Gifts

You can run into the same sort of situation if you do not treat gifts in the proper manner. For example, if your parents gave you some money to help with a financial crisis and you treat it as joint funds, the court may view it as a gift to the both of you. Your husband will have the right to demand his fair share of the money. When you start the divorce process, the last thing you want is surrender more property than absolutely necessary to your ex.

Keep a paper trail

The general rule you should always follow is to keep inheritances and gifts separate from anything that might make it look like joint property. Use separate bank accounts. Never transfer money between the separate account and joint accounts and do not use it for joint purchases. In addition, keep any documentation that supports your claim that the property is separate. If your parents give you a monetary gift, write a quick description of the transaction, your parents' intention that the money was solely for you and not your spouse, and have them sign it.

Property division is one of the most contentious aspects of divorce. This is especially true when the individuals involved cannot agree on whether property is separate or marital. Protect your property by keeping it truly separate and retaining appropriate documentation that supports its standing.

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