Can Separate Property Become Marital Property in Colorado Law?
As we have discussed before, the classification of property as either marital or separate is an immensely important determination. In Colorado divorces, when dividing property, one spouse typically keeps their separate property, while marital property is divided according to preestablished principles. One question we haven’t tackled directly is whether separate property can become marital property in Colorado? In other words, can property which is at one point firmly classified as separate property be “transformed” into marital property which is then subject to division? The answer is “yes,” this can happen, but only under certain circumstances. Let’s take a look at how separate property can become marital property in Colorado.
Commingled Property in Colorado Law
One way for separate property to become marital property is through the act of “commingling.” This can happen, for example, when spouses hold separate bank accounts, but begin to commingle their separate funds. If one spouse begins depositing his or her separate funds into a jointly owned bank account, or into the other spouse’s separate bank account, this can alter the classification of the commingled funds. Rather than separately tracking commingled separate funds within a joint account, they may simply become marital property and be subject to division.
Property Assigned via Private Agreement
Property is generally classified as separate if it is acquired in a certain manner, but this classification is essentially a “default” way of handling the property. For example, property owned prior to marriage, or acquired via inter vivos gift or inheritance during the marriage, is classified as separate property, but separate property can also be voluntarily assigned a new classification by the owner. For example, a spouse can simply convert separate property into marital property via prenuptial or postnuptial contract, or via private settlement agreement. There may be various reasons as to why this may occur. The key point though is that, even though there are default rules, parties can freely decide to alter the classification of separate property at their discretion.
Appreciated Property
Another instance in which separate property may “become” marital property, at least in part, is when separate property appreciates in value during the marriage. Consider the example of a separately owned piece of real estate which appreciates in value after the marriage takes place. The appreciation in value is considered marital property, even if the property itself is technically the separate property of one spouse. In divorce, the value of the property which represents the appreciated portion will be subject to division.
Paying a mortgage with marital funds during marriage partially changes the classification of separately owned real estate, making the portion paid with marital funds marital property and subject to division.
Contact the Drake Law Firm for More Information
If you would like more information on property division in Colorado law, separate property classification, converted property, prenuptial agreements, or another similar topic, contact one of the family law attorneys at the Drake Law Firm today by calling 720-797-6790.