Gabriela Sandoval is a Certified Real Estate Divorce Specialist (CREDS). She can talk to you about your real estate options prior to and during divorce. Always consult directly with your family law attorney or collaborative team and tax professional to discuss the legal and financial particulars of your unique situation.
For most married couples, the family or marital residence may be the single most valuable possession in the marital estate. Aside from the economic value of the marital home, the residence often carries with it deep psychological roots and this is amplified when there are children involved. Colorado recognizes the attachment that a spouse and children may have to the home. In dividing property, the court must consider the “desirability of awarding the family home or the right to live therein for a reasonable period to the spouse with whom any children reside a majority of the time.”
Making the right decision will require considering many factors that will affect you and your loved ones. Transitions are not always easy, but they can provide a much better quality of life. In any divorce or separation where the spouses own their own home, there will be a need to settle upon an appropriate disposition of the residential property. In general, there are three options:
Transfer by one spouse to the other of his or her interest in the home;
An immediate sale of the home, with a division of the proceeds between the spouses; or
Keeping the property for the time being and division of the proceeds at some point it the future.
It’s important to note that each option has it’s own tax implications based upon your unique circumstances. Your attorney and accountant should be consulted to determine the best course.
In Colorado, marital property is divided “equitably.” The three-step process: Determining if the property is marital or separate; Valuation of the property; and Equitable distribution of the property.
Separate or Marital?
Title alone does not determine if the property will be classified as separate or marital.
Colorado statute defines marital property as “all property acquired by either spouse subsequent to the marriage.” C.R.S. § 14-10-113(2). Also, “all property acquired by either spouse subsequent to the marriage and prior to a decree of legal separation is presumed to be marital property, regardless of whether title is held individually or by the spouses in some form of co-ownership…C.R.S. § 14-10-113(3).
In the case where one of the spouses acquired the property before the marriage or by gift, bequest, devise, or descent, or in exchange for property acquired, the property is marital property but only to the extent that its present value exceeds its value at the time of the marriage or at the time of acquisition if acquired during the marriage. C.R.S. § 14-10-113(4).
Note that, there is a presumption that a gift by a third-party donor during the marriage, which increases the value of a jointly titled asset of the spouses, is a gift to the marriage. Also, when a spouse places separate property in joint ownership during the marriage, a presumption arises that the donor spouse intended a gift to the marriage. This presumption can be defeated only by clear and convincing evidence to the contrary.
There are four exceptions to the broad inclusion of marital property:
Property acquired by gift, bequest, devise, or descent;
Property acquired in exchange for property acquired prior to the marriage or in exchange for property acquired by gift, bequest, devise, or descent;
Property acquired by a spouse after a decree of legal separation; and
Property excluded by a valid agreement of the parties.
The court cannot divide separate property, only marital property. To make a claim of separate ownership successfully, a spouse must trace the property to its separate origins.
To qualify as a “gift”, a transfer of property must involve a simultaneous intention to make a gift, delivery of the gift, and acceptance of the gift. The determination hinges on the intent and acts of the donor and recipient, which are questions of fact for the district court to resolve.
Valuation of Property
Property must be valued as of the date of the decree or hearing on the disposition of the property. An exception is if one spouse dissolves marital assets in contemplation of divorce – those assets must be valued as of the last date they existed as marital property.
The parties must present the court with sufficient data to make a reasonable valuation. The fair market value can be determined by an appraiser. Another method of valuation, a comparative market analysis (CMA), is done by a real estate agent. It should provide a range of value that the home should be listed at in the open market at a date in the future. A CMA may be less expensive, however, the CMA may not provide the accuracy and quantitative analysis of an appraisal and does have a slightly different purpose. Tax assessments may provide an indication of value but are generally not as accurate as a CMA or an appraisal and often are outdated.
Equitable Division of Marital Property
The court will divide marital property as it deems just after considering all relevant factors including but not limited to:
The contribution of each spouse to the acquisition of the marital property, including the contribution of a spouse as a homemaker;
The value of the property set apart to each spouse;
The economic circumstances of each spouse at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live in the home for reasonable periods to the spouse with whom any children reside the majority of the time; and
Any increases or decreases in the value of the separate property of the spouse during the marriage or the depletion of the separate property for marital purposes.
If you are going through a divorce and determine it will be best to sell the marital property, I can help you through the process. A new beginning can be frightening but I can assist in finding you the right place to call your new home.