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December 8, 2014

Denver Divorce and Hidden Assets

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Whether a Douglas County divorce attorney, or one practicing just below the slopes of the Aspen ski hills, we all know the importance of financial disclosures in any divorce case. Colorado Rules of Civil Procedure rule 16.2 sets forth the procedural aspects, or rules, a court expects parties, with or without attorneys, to follow related to case management. This includes rules regarding disclosure of documents and information related to the financial issues of a divorce case, which can include property division, debt division, maintenance (alimony), and child support.

Sadly, from time to time, we see cases in which one party will attempt to hide assets from the other party. In most cases people are forthcoming, understanding that they are indicating to the divorce court, under penalty of perjury, that they have provided a complete listing of their assets and debts. However, every once in a while, you will get that one person who feels they might get away with not disclosing a bank account, stock account, or perhaps that tangible piece of property, such as artwork or a piece of expensive jewelry. Of course, there are limitations to what an attorney, or even a private investigator, might be able to find. In employing the tricks-of-the-trade, family law attorneys know how to go through the various financial disclosures to assess whether there are other items being concealed. Of course, this is not full proof. Likewise, people may come to an attorney after their divorce is done, indicating they believe the other side hid something from them. Fortunately, whatever the situation, statute affords parties to a Colorado divorce case a remedy, via a 5 year window, in which to seek relief should hidden or undisclosed assets become known.

Initially, C.R.C.P. Rule 16.2(e)(2) requires the parties to a divorce case to voluntarily disclose the following as can relate to assets:

A "Sworn Financial Statement"
The last three years of personal (and business if applicable)
Personal financial statements
Business financial statements
Real estate documentation
Investment account statements
Retirement account statements
Employment benefit statements
Bank statements
Income documentation
Insurance documentation

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November 28, 2014

Same Sex Divorce and Child Custody Issues in Colorado

baby-hands-1391967-m.jpgAs we have earlier covered on this blog, same-sex marriages are now legal in Colorado because the United States Supreme Court decided not to hear any appeals regarding the constitutionality of same-sex marriage bans from the 10th Circuit. Now that same-sex civil marriages are recognized in Colorado, divorces are also possible, and with divorce will come child custody and visitation issues.

Assuming both partners are legal parents of the child, the same standards will be used for child custody issues as are used when heterosexual couples divorce. The parents may both be legal parents of the child when the child is born into a same-sex marriage or when a non-biological or non-adoptive parent adopts his or her partner's biological child through a second parent or stepparent adoption. The standard for child custody and visitation in that case will be the best interests of the child under C.R.S. 14-10-123.4.

However, if only you or only your same-sex spouse is your child's legal parent, you may need to bring a paternity or maternity petition in order to obtain custody and visitation when you and your spouse separate. Based on prior case law, it does not appear that Colorado child custody and visitation proceedings will be handled any differently because of the legalization of same-sex marriage. In general, it is to be expected that the Colorado courts will place the child's best interests first and award parenting time to the parent who is not a legal parent when that parent has acted as a parent throughout the child's life, and when there is no other biological parent whose rights would be affected.

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October 22, 2014

What Time Period Should a Colorado Court Consider When Determining "Current Financial Resources" in a Divorce?

Samuel_D._Ehrhart,_An_international_high_noon_divorce,_1906.jpgColorado law allows a trial court to order one party to a divorce to pay for the other party's attorney's fees. C.R.S. 14-10-119. The court must take both parties' financial resources into account, including both the amount available to one party and the amount needed by the other, in determining the amount of the order. The statute is silent, however, on the time period, or point in time, that the court should consider in determining an amount. The Colorado Court of Appeals recently considered this issue in a case where the trial court held separate hearings on permanent orders and attorney's fees about six months apart. In re the Marriage of de Koning, No. 12CA2334, slip op. (Col. App., Jan. 2, 2014). The parties disagreed on which hearing date the court should use in considering the amount of financial resources.

The wife incurred about $90,000 in attorney's fees during the divorce proceedings. The husband paid about $20,000 of that amount before the entry of permanent orders, and the wife requested that the court order him to pay the remaining amount at the permanent orders hearing. The court entered a decree dissolving the marriage, as well as permanent orders regarding the division of the marital estate, maintenance, and parental responsibilities and child support. It deferred a ruling on attorney's fees, however, and set a hearing for six months later.

The wife served the husband with discovery requests seeking information about his personal and business financial accounts. He obtained a protective order for this information from the court, which agreed with his claim that any eventual attorney's fee award would be based on his financial resources on the date of the permanent orders. At the fee hearing, he claimed that he should not be ordered to pay the remainder of the wife's attorney's fees because they each had the same amount of assets "on paper." De Koning at 3.

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October 8, 2014

COLORADO DIVORCE AND SAME SEX MARRIAGE


On October 6, 2014, the United States Supreme Court declined to hear cases coming from various US Circuit Courts of Appeal regarding the issue of same sex marriage and rulings finding the bans of various states on same sex marriages to be unconstitutional. One (or more) of those cases came from the 10th Circuit Court of Appeals, located in the heart of our booming metropolis, that being Denver.

From a legal analysis standpoint, by declining to hear or weigh in on those case, the US Supreme Court effectively let stand the decisions that the various state laws at issue in the Courts of Appeals cases were null and void. Colorado, including, of course Denver, is part of the 10th Circuit, which also includes Kansas, Wyoming, Oklahoma, New Mexico, and Utah. The specific rulings which strike down the laws prohibiting or curtailing same sex marriages are applicable throughout the circuit.

The intent of this post is not to weigh in on the hot button topic of same sex marriage. We are lawyers, not politicians or political pundits. Any opinion will offend one side or other of the debate. We don't want to offend anyone. Whether same sex marriage if viewed by some as "right" and some as "wrong," the legal fact is that the greenlight has been given for counties throughout the state to start authorizing same sex marriage, or rather not blocking such.

As same sex marriages evolve in Colorado, so shall same sex divorces. With the 2013 passing of the Civil Union bill in Colorado, Denver area family law attorneys have already seen changes to the domestic relations law legal landscape. Contrary to what some might have anticipated, those changes have not had a significant impact on the courts or us, as attorneys. In the few months since the Bill became law, we have talked to clients, or potential clients, regarding dissolution of civil unions, and have litigated civil union dissolutions. Realistically, the process for dissolving a civil union is almost identical to dissolving a marriage. There is no reason to believe that dissolution of a same sex marriage will be any different.

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August 25, 2014

Recent Colorado Appellate Case Discusses Arbitration in the Divorce Context

Arbitration has become more and more popular in the last few years, as litigants opt to resolve their issues outside of the formal courtroom and in the more informal setting of arbitration. Although not as formal as a courtroom, the arbitrator's decision on the legal issues in front of him or her is generally legally binding. In fact, in some cases the reviewability of an arbitrator's decision is extremely limited.

broken-heart-1321733-m.jpgAlso, there are a few important limitations on an arbitrator's authority to decide legal issues. The Colorado Court of Appeals recently decided a case that required the Court explain how arbitration fits into the family law context, specifically divorce.

The Facts

The facts of the case are quite simple, actually. Husband and Wife got divorced and, as a part of the divorce, Husband was to pay Wife $4 million over the course of several years. The payments were structured so that Husband would pay Wife a monthly amount for several years and then, after all marital property had been liquidated, Husband would pay Wife the remaining amount in a lump sum. The final part of the deal was that Husband was entitled to some credits, according to expenses he incurred while selling the property.

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August 2, 2014

Modification of Spousal Support Orders in Colorado Divorces

In many Colorado divorce proceedings, the court will determine that one spouse must provide some form of support to another spouse. Often, this is because one spouse put his or her career or education on hold to care for the marital home, or because the income potential of one spouse is significantly higher than the other spouse.

family-with-baby-4-1046983-m.jpgHowever, it is important to know that even when a Colorado family court judge hands down a final order in a divorce proceeding, that order is not necessarily permanent. Almost all orders can be modified under certain circumstances, when required conditions are met. This is also true of spousal support orders.

Modifying a Spousal Support Order in Colorado

Spousal support orders, or spousal maintenance orders, can be modified in some instances. However, there is no hard and fast rule for when modification is appropriate. Instead, it is left up to the courts to determine when a modification of a spousal maintenance order is proper.

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June 23, 2014

What Constitutes Marital Property in Colorado?

When a marriage comes to an end, there must be a division of the assets that have been accumulated during the marriage. Generally speaking, states take one of two approaches when dealing with the division of marital assets. The more common of the approaches, and the approach taken by the state of Colorado, is "equitable distribution."

tracks-in-field-1435694-m.jpgThe concept of equitable distribution is exactly what it sounds like. The property in a marriage is not divided equally between the parties but in a manner that is fair, given a number of different factors. Before a court gets to the division of marital assets, however, the court must first determine what constitutes a marital asset and what is the individual property of the parties.

Marital Assets in Colorado

In Colorado, the general rule is that property owned by either party before entering into the marriage remains the individual property of that party. All jointly held property is marital property. In addition, even an increase of value in individual property during the marriage can be considered marital property, depending on the circumstances.

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May 21, 2014

DENVER DIVORCE AND "DISCOVERY" (Part 2)

Earlier this month, we posted the first part of this article, setting for the basics of what Denver area family law attorneys call "discovery." As previously indicated, discovery is generally issued in divorce, custody, or child support cases when one side believes more information is needed. This can include a heightened request for documents, generally financial in nature, or requests for questions to be answered, whether of a child related or financial nature. Discovery in a family law case will generally entail interrogatories (questions to be answered) or requests for production of documents. Your attorney can assist you with determining whether the specific facts and circumstances of your case warrant, or necessitate, the issuance of discovery.

Some examples of when discovery might be needed would be in a situation in which the wife has handled all of the family finances or, perhaps owns a business. In such an instance the husband might be in the proverbial dark as relates to the family finances, past or present, and may be in need of further information for purposes of assessing a divorce settlement or preparing for court. Interrogatories may be a useful tool for purposes of ascertaining the other side's position as relates to custody issues, or perhaps for purposes of boxing them into specific written answers which can be used in court. As indicated in the prior posting on this subject, when one side issues formal discovery, it is extremely likely that the other side will do the same. Set forth below are some common rules or pointers for both issuing discovery, as well as responding to it.

1. Pursuant to the Colorado Rules of Civil Procedure, discovery must be issued 63 days before a hearing. Generally, this would be the final divorce or custody hearing. In some instances, there may be interim hearings set, such as a temporary orders hearing. Discovery can be issued less than 63 days before these interim hearings, but one must be aware of that 63rd day prior to the final disposition of the case. Though courts can sometimes be flexible or lenient with deadlines in a family law case, the technical rule would be that discovery issued within that 63 days is issued improperly. When faced with improperly issued discovery, one should look at filing an objection to the request within the time frame allotted.

2. Discovery may not be issued prior to the initial status conference in any case. Pursuant to C.R.C.P. Rule 16.2, parties must first attend the mandatory touch base conference with the court prior to issuing discovery. Some counties may even issue case management orders indicating that permission must be sought from the court prior to issuing discovery. Parties should be aware of the provisions set forth in their case management orders. From time to time, we do even see attorneys issuing discovery early, or late. In those instances, and objection is also appropriate.

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May 5, 2014

COLORADO DIVORCE AND FILING FOR BANKRUPTCY (PART 2)

wedding-rings---african-american-1384052-m.jpgThe first part of this discussion on bankruptcy gave an overview of the bankruptcy process and how it applied to couples who were still married. The second part will discuss the impact of bankruptcy when a couple separates or divorces.

What Happens If a Couple Separates?

In some respects, if a couple separates but remains married, the effect of one spouse filing for bankruptcy is not much different than if they lived together. Assuming the debtor spouse filed individually, the nonfiling spouse might find that certain marital property was considered part of the bankruptcy estate. While the debtor spouse could wipe away a substantial portion of his or her debts, the nonfiling spouse would still be responsible for his or her separate debts.

The above may depend upon how long the couple has been living apart. If the debtor spouse waits several years after the separation to file for bankruptcy, it is more likely that the bankruptcy court and trustee will view the nonfiling spouse's property as separate property, not marital property that is part of the bankruptcy estate.

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April 14, 2014

DENVER DIVORCE AND "DISCOVERY" (Part 1)

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In any Denver area divorce or custody case, each side is going to be required to complete and exchange regular financial disclosures pursuant to the Colorado Rules of Civil Procedure, Rule 16.2. Normal financial disclosures will include drafting what is called a "Sworn Financial Statement," which is a document essentially setting forth a party's income, assets, debts, and expenses. In addition to the Sworn Financial Statement, parties will also be required to provide various other documents, such as the last 3 year's tax returns, last 3 month's pay stubs, and current bank, credit card, insurance, retirement, and various other financial statements. The purpose behind this exchange to make sure that each party has the financial information he or she needs to make assessements as to various financial issues, whether income related to child support or alimony, or what property there is in a divorce case and how it will be divided.

The normal C.R.C.P. Rule 16.2 financial disclosures tell part of the picture, but sometimes don't give enough information for people to make informed decisions or prepare adequately for a court hearing. As such, the Rules of Civil Procedure also authorize various other mechanisms for gathering information from the other party. Specifically, there are various rules which allow depositions, requests for admissions or inspection, interrogatories, and requests for production of documents. In general, this body of requests that can be made is called "discovery." As Denver area divorce and family law attorneys we generally see the "discovery" issued, or received, in the form of the the latter two: interrogatories and requests for production of documents. In theory, discovery should be issued in instances when the financial disclosures just don't tell enough, or more information is sought, such as might relate to the children or job search efforts. Other instances in which our attorneys might issue discovery might be when the other party is self employed or owns an interest in a business, or perhaps has been the one who primarily, or solely, dealt with the parties' finances.

Discovery can be a useful tool in both a divorce or custody case. As a general rule of thumb, and keeping client funds and costs in mind, discovery should only be issued when needed. Issuing and responding to discovery bring certain additional costs and challenges. Sadly, there are attorneys out there who issue it "just because" or as a matter of course. In these instances, there is not much one can do, as each party has the right to request more information. Inevitably, when one party issues discovery, the other side will almost certainly return the favor. Though this might sound childish, the legal world can be very tit-for-tat.

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February 16, 2014

Colorado Divorce and Income Tax Ramifications

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A Colorado divorce case can have many facets to it, whether financial or child related. The financial aspects of a divorce case can include property division, alimony (properly termed "maintenance"), and child support. With those financial aspects come various nuances and intricacies of which your expercienced Colorado family law attorney should be aware. One category of nuances tied into the financial aspects of a divorce case relates to taxes.

Most Denver area divorce attorneys have a basic understanding or knowledge of tax implications tied into a divorce case. Because the Internal Revenue Code is a volumious and shifting literary compilation, most family law attorneys are hesitant to give concrete tax "advice" to their clients. That does not mean that we cannot import general tax information or knowledge to our clients with the caveat of, "you should follow up with an accountant to be certain." In essence, family law attorneys are not tax experts. Despite the lack of expertise as relates to taxes, set forth below are some of the basic topics in which tax issues can arise in a Colorado divorce case and basic information related to such.

MAINTENANCE:

"Maintenance" is the proper term for what people might often call alimony in Colorado. Alimony is essentially spousal support. Colorado statute and case law indicate that depending upon financial circumstances, one spouse may have a duty to financially support the other, for a certain period of time, during and after a divorce case. The issue of taxes arises in an alimoy situation in that the Internal Revenue Code allows the party paying alimony to deduct the payments he or she makes from his or her income on the tax return. This can include temporary maintenance paid while a divorce case is pending, maintenance paid after the divorce is done, or sometimes "unallocated" support that is not necessarily defined, so long as that "unallocated" support is not classified as child support. When one is in an alimony paying situation, it becomes important to speak with a learned accountant to find out specifically your rights, obligations, and what documentation you may need, from an IRS stand point, to be able to claim the deduction. An accountant can also strategize with you in terms of making sure you handle your tax affairs in proper fashion as relates to alimony. The tax code is tricky and subtle deviations in how you pay or what you pay can have an effect. For example, the IRS may allow you to deduct the $2000 in alimony you pay on a monthly or "periodic" basis, but might disallow the deduction if you pre-pay for the year in a lump sum. The primary point is that as an alimony payor, you need to be informed as to the tax benefits and consequences tied into your court orders.

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January 25, 2014

Is Sick Leave Considered Marital Property in Colorado?

summer-beach-1270002-m.jpgThe Colorado Supreme Court recently decided an interesting issue for the first time. It looked at whether accrued vacation and sick leave is considered marital property during a divorce. In the case a husband and wife petitioned for divorce in 2007. The trial court divided the husband's accrued unused vacation and sick leave, construing it as marital property.

The wife had submitted an exhibit during the divorce at the bottom of which she noted her estimate that the husband had accrued $23,000 worth of vacation and sick leave. The wife stated she would not ask for half of this sum if she could move to Florida with their kids. If she moved to Florida, she would leave the amount for the husband to use for visitation with the kids.

The court calculated that the husband had 452 hours of leave and sick time, which was worth $51.40 per hour or $23,232.80 in total. The husband's pay stub did not indicate whether the accrued leave had a cash value. However, the husband was entitled to payment of the accrued leave if his job was terminated.

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November 19, 2013

Gifts and Property Division During a Colorado Divorce

white-house-1426634-m.jpgFrom the wedding and throughout the course of a marriage, a Colorado couple may receive many gifts, including gifts of real estate or significant amounts of money. If the couple gets divorced, one of the major controversies of the divorce may be who gets the property that was gifted. Is it separate property belonging to the partner who is friends or family with the gift giver? Or is it property to which both partners have a right? How does property division work in the case of gifts? Disposition of property in Colorado is covered by Colorado Revised Statute 14-10-113 and case law.

In a recent case, a husband appealed as to the property distribution ordered in connection with his divorce, among other things. One major piece of property that caused contention was the marital home. The couple had purchased the martial home together as joint property while they were married. Years later, the wife's mother had paid off the mortgage by making a direct transfer to the lender. The couple was still married at the time. Soon after she paid the mortgage, the mother signed a trust instrument that described all her gifts to the wife as advances on her inheritance.

The mother's trust instrument did not mention the husband. At trial, the wife testified the mother did not intend the mortgage payments as a gift to the marriage, but just to her. The husband testified both the wife and mother had told him it was a gift for them both. The trial court classified the home as the wife's separate property because her mother had contributed to the mortgage. It found that the funds used to pay the mortgage were treated as part of the wife's inheritance, which would be separate property.

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July 29, 2013

Division of Property During Divorce in Colorado

photo_6288_20080611.jpgIf you file for divorce in Colorado, within 40 days of serving your husband or wife you must also file a sworn financial statement with the court and make various mandatory disclosures to your spouse. Unlike some other states, Colorado is not a community property state; not all of your property is considered equally the property of your spouse. Therefore, the judicial system requires that spouses make each other aware of their financial information while coming to an agreement on marital property, debts, and maintenance.

When the parties are unable to come to an agreement, the court divides the marital property by weighing several factors. Among these factors are: each party's contribution to acquiring the property, including the contribution of a homemaking spouse, the value of each party's contribution, economic circumstances of both partners when they divorce, which partner is going to have custody of the children, and any changes in property values where only one party owns the property. Some items often considered "marital property" by the court are pensions, life insurance policies, tools, businesses, houses, vehicles and furniture.

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June 12, 2013

DENVER DIVORCE AND YOUR BUSINESS

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As divorce attorneys in Denver, we deal with various issues in any case. This can include issues related to children, property, financial support, and more. Not all cases are the same. One of the significant issues that can arise in a divorce is the division of property. In most cases, the property to be divided consists of a home, retirement and bank accounts, vehicles, investment accounts, or the furniture and pots and pans. However, there are families or parties to a divorce case who own businesses or business interests. As part of our divorce practice, experienced family law attorneys at Plog & Stein assist with the valuation and division of business assets as well.

Colorado business interests come in all shapes and sizes. A person may own a large business, such as a chain of restaurants or a car dealership. A person may own a small business, such as a one person accounting firm or a mom-and-pop laundry mat. A person might also own a fraction or portion of a business, without owning the whole entity outright. In a Colorado divorce setting, a business, or interest in a business, is generally considered property. As property, the same principles for dividing other assets apply. Property acquired during the marriage, absent a limited exception, is marital. Increases in value during the marriage to property acquired prior to marriage are considered marital in nature. Titling on property determined to be marital does not matter and said property can be divided by the court regardless of whose name it is in.

Prior to arriving at the actual division of a marital business asset, the parties must determine the value of a business. Contrary to popular belief, the value of any business is more that just looking at the assets/property and debt to arrive at a value from a balance sheet approach. Though this can be one facet of a business valuation, there is much more to the equation generally accepted by attorneys and courts in a Colorado divorce case. Beyond assessing assets and liabilities, a business valuation will entail an assessment of current and historical revenues and profits. This analysis also ties into the term "good will," which can be quantified into an actual dollar figure. We have seen cases in which there may be a two person professional operation in which one party or the other will say, "There's no value to the business; I am the business." Of course, this will be a statement made by a husband or wife who actually runs or owns the business. Conversely, the other party may find it meritorious to look into whether even a small business has value for asset division purposes. As part of the process, business valuators can also determine historical values, such as the value at the time of marriage or acquisition, as well as the current fair market value.

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