• 04
  • June
    2010

The next few posts will discuss asset protection, specifically how to protect a business during the divorce process. However, before undertaking this discussion, it is extremely important to have an understanding of what constitutes marital property and what constitutes separate property.

Why is this so important?

The answer is relatively simple: Only marital property is subject to division in a divorce. Depending upon the circumstances, separate property remains untouched.

Separate Property

What constitutes separate property?

• Property owned by a spouse prior to the marriage
• Gifts received from a third party
• Inheritances
• Pain and suffering damages recovered in a personal injury lawsuit

It is important to note that separate property can sometimes be reclassified as marital property, thus making it subject to division. For example, if the separate property increases in value during the marriage, this increase in value will be subject to division.

In addition, if separate property is comingled with marital property, it can be reclassified as such. For example, if money received from an inheritance is placed into a joint checking account shared by a husband or wife, it will be reclassified as marital property.

Marital Property

Marital property is property acquired during the course of the marriage and therefore subject to equitable division. Marital property can take a variety of forms, including:

• Retirement accounts (pensions, IRAs, 401(k)s)
• Stock options
• Bonuses
• Annuities
• Life insurance policies
• Stocks, bonds, mutual funds
• Bank accounts (checking, savings)
• Car, boats, other vehicles
• Homes
• Tax refunds

Please note, Colorado is an equitable distribution state. This means that the court will divide assets based upon consideration of a variety of factors, including the length of the marriage, age and respective contributions of the spouses, etc. However, equitable distribution does not necessarily mean equal distribution.

The next posts will examine asset protection strategies that can be undertaken to protect a business.
 
Related Resources:
  
• How to Protect Your Business in a Divorce (Inc.com)