Divorce Pitfalls: The Three Biggest Mistakes with Separate Property

This next installment in the Divorce Pitfalls series is about separate property.  One of the biggest mistakes we see is people not understanding and protecting their separate property.   If you’re unsure what is separate property and what is marital property, see our blog Separate Property in Divorce: Keeping What Is Yours.

Mistake #1:  Titling separate property jointly with your spouse.

In Colorado, if you have separate property in your name, but then you add your spouse’s name to that property, you have gifted the separate property to the marriage.  You then lose your right to claim the separate property value if you get divorced.  Here is an example of that mistake:

  • Ellen has a house in her name that she owned for several years before she married Danielle. She used some inheritance money as the down payment, and she also paid down the mortgage.  The value and equity also grew before they got married.  If Ellen kept this house in her name alone then the equity from when they got married would be only hers if they got divorced.
  • Ellen did not read this blog or talk to a lawyer. In the love and happiness of their marriage, she adds Danielle as a joint owner on the deed to the house.  In doing so, she has gifted her separate property to the marriage.  This means that if they get divorced, the WHOLE value, including the inherited down payment and the equity from before the marriage, is divisible as marital property.

There are some circumstances where you can reclaim the separate property value.  However, they are very difficult to achieve and often end up with the parties in court.  That only assures that everyone will be unhappy and that the lawyer’s bill will be very high.  We want you to avoid that.


Mistake #2: Not claiming your separate property early.

One of the most important parts of the divorce process is the financial disclosures that happen at the very beginning of the case.  When we are working with you to prepare these disclosures it is very important that our clients tell us if they have anything that could be considered separate property.

In order to have the best chance of protecting your separate property, your attorney needs to disclose it in the first set of financial disclosures.  It also should be listed in the sworn financial statement as separate property.

If we don’t know that you have separate property until at mediation, then it is too late for us to try to claim that separate property for you.  As you will see below, we have to have documentation to prove the value of your separate property.  That is almost impossible to get on short notice while you’re at mediation.

It is extremely important that if you think you might have separate property that you let your legal team know early.  They will help you get all of the information that you need to protect your asset.

Mistake #3: Not having documentation

It is fine and good to have separate property.  However, if we cannot prove the value of the property at the time of marriage then we cannot claim the value as separate.  Approximates usually aren’t acceptable when people are trying to divide their whole lives.

The best case scenario is that you are an excellent record keeper and you have saved the statements or tax assessments from the year that you were married.  That rarely happens.  If that is the case, then we can help you request statements or tax assessments.

The following are good examples of documentation of separate property.  Each of these will be from the year (or even better the month) of your marriage.  Even ones a few years after can be helpful:

  • Statements from your bank, retirement, and investment accounts.
  • Tax assessment from the county on your real estate.
  • Documentation from refinancing of your property.
  • Appraisal of your home that you may have had during the marriage.
  • Pension value statement .


Avoid These Mistakes

The best way to avoid these mistakes is to work with a good legal team.  They can ensure that they ask the questions and get the documents to protect you.  Contact Us today for a consultation with an experienced attorney.

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