Colorado law requires an equitable distribution of property at the time of divorce between the two spouses. Equitable distribution refers to a system of property division which is based more on 'Fair' distribution rather than a strictly equal distribution of property. How to fairly divide the property depends on several factors that the court takes into account, such as the spouse's economic circumstances, their future income capacity and how the division will affect their children.
The court needs to decide which part of the combined family property is classified as marital property, and which part is classified as separate property. A piece of property is considered separate if it belonged to one of the spouses before marriage or was acquired through inheritance, or as a gift. Items purchased through the sale or exchange of such property are in turn also considered separate property.
On the other hand, marital property includes the assets and debts that the couple acquired during their marriage. If the value of a separate piece of property increases during marriage, the added value is considered marital property. Marital property can also be voluntarily converted into separate property, or vice versa through a written agreement.
In some cases, marital and separate property are mixed together either intentionally or by accident. It is then up to the court to decide in what manner the property is to be distributed between the spouses.
Once the pieces of property are separated, the court will then assign a certain monetary value to each item. In case couples are not sure of the value of a particular item, they can ask for the services of a professional appraiser. In case some assets are difficult to evaluate through regular means, as can happen with retirement accounts, the services of a financial professional will be employed.
Now comes the task of actually dividing the property between the two spouses. Items are assigned to each ex-spouse, and an equalizing payment can also be assigned to one spouse in case the other one gets the bulk of the property in the shape of some of the more valuable assets. Property can also in some cases be sold off, with the proceeds getting divided between the two parties. In some cases, the ex-spouses also choose to continue co-owning a piece of property after the divorce. This can be necessitated by an array of factors, such as the desire to hold on to the couple's former house until their children are grown, or when they wish to continue to operate a joint business together.