It’s no secret that divorce can be a very hard thing to go through. It’s the closing down of a period of life you hoped would last forever, and that’s not easy on anyone. Given that, it’s not surprising that things can be overlooked in the final settlement. This is true in most cases, and especially in ones with complex financial portfolios that must be shared, property that must be split and a wide range of assets, from the sentimental to the valuable, needing to be divided among the spouses.
The things often overlooked in divorce agreements start with the investments you and your spouse have, both individually and collectively. To best understand why, let’s first summarize two core principles that will govern your settlement process.
Understanding Property Division in Colorado
The courts aim to treat spouses equally, but that doesn’t mean all your assets are simply split down the middle and shared. The first step is to define what is separate property and what is marital property. Separate property is what was yours prior to the marriage or received as a gift during the marriage (e.g., an inheritance). Marital property is what was acquired by you and your spouse after your marriage.
Getting this sorted out is more complex than you might think, especially with stock portfolios and real estate that may have been brought into the marriage and accrued value during it. Another complexity comes with the fact that Colorado is one of 41 states that use the principle of equitable distribution in divorce settlements.
The term might seem innocuous–it just means you and your spouse get equal treatment on the distribution, right? It does mean that, but it also means something else. Equitable distribution is not required to be 50/50. It simply must be equitable in the eyes of the court. Now, that can often result in a 50/50 split. But it doesn’t have to, and that can be important in the distribution of more complex financial assets.
So, with that very basic understanding of Colorado property division law, let’s review the things most overlooked in a divorce settlement.
Let’s start with your 401(k) plan. This is in your name and your spouse’s account is in theirs. It would be easy to assume, on that basis, that this is separate property. That’s not the case. If you started your job after getting married, then the entire account is marital property and subject to equitable distribution. Even if you had the job before getting married, the value that was accrued after marriage will still be marital property.
If you have children, you may have already started college funds for them. Who do those accounts belong to? Just as important, who is going to oversee them after the divorce?
Are you or your spouse the beneficiary of a trust? Maybe your mother-in-law is independently wealthy and set up your spouse as a beneficiary. Is this your spouse’s separate property or is it marital property? That’s an extremely complex question that will depend on a lot of factors. But your lawyer should certainly do their due diligence to protect your interests.
Your attorney also needs to be working with you to review IRS returns and bank statements. There may be assets you and your spouse have forgotten about but will be uncovered in this review.
There’s also the question of your tax refund. Depending on what time of year your divorce is finalized, the refund could be separate property, or it could be marital property. It’s enough money to make sure it’s not overlooked.
What about loans that may have been made privately? Your spouse persuaded you to lend your brother-in-law a nice chunk of money to buy a starter home. The brother-in-law is responsibly paying back the money as promised. He’ll likely continue sending a check to your soon-to-be ex, but you have a right to an equitable share of that money. It was loaned as marital property. The payback will be considered the same.
We think it’s safe to say that your house won’t be overlooked in the divorce settlement. But aspects of the home’s value could be, at least if you or your spouse owned the home prior to marriage. A home owned prior to marriage is separate property. Couples often do home renovation projects together though. Was the remodeled kitchen done with marital funds? If so, any corresponding increase in the value of the home is now marital property.
What about all the tools and other equipment associated with yard maintenance? Couples have different levels of interest in using these and their overall stock of tools can vary sharply in value. But if one spouse bought a substantial number of tools and will be the one to use them post-divorce, those still need to be shared equitably. The other spouse may well choose to forgo them. But to overlook them would be to ignore their value as a negotiating…tool.
Recreation & Personal Assets
Club memberships can be expensive, and they can also be overlooked in the divorce settlement. Which party will own the membership and be responsible for it should be placed on the bargaining table.
Have you thought about how you are going to share the air miles you’ve built up? If your spouse did a lot of traveling for work, they probably have a lot of miles. Those are valuable and you have a right to share in them–after all, when they were gone, you were the one who kept the house going and spent nights alone. Don’t overlook the value of mileage. It might pay for a deserved vacation for you when this is all over.
Photographs have tremendous sentimental value to a lot of people. How do you plan to split these up? Couples may choose to simply have duplicates made, but that comes with its own costs. Whatever you decide, it’s something that needs to be considered.
You may be going through a tough time right now, and all of this is a lot to remember. That’s why a good divorce lawyer is there to think of the things that you might not. The Law Office of Alexandra White, P.C. is stacked with the kind of divorce attorneys who will listen to you, think strategically and then dig in to fight for your interests. You have enough to deal with without worrying about overlooking something. Let us help. Call us today at (303) 647-4245 or contact us online to set up your first consultation.