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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.

The appellate court explained that if a spouse makes separate property into joint property during the marriage, it is presumed that the donor spouse intended the item to be a gift to the marriage. Therefore, it’s presumed marital unless the spouse that opposes the presumption can present clear and convincing evidence otherwise. There was no prior Colorado case law that addressed whether the same presumption applied when a third party’s gift increased the value of joint property.

The appellate court looked at prior case law from other jurisdictions. In an earlier case from New York, the court had treated gifts from the wife’s father that were given in order to satisfy the parties’ joint debt as marital. A Florida case applied the same marital presumption in the case of a husband’s mother paying a portion of a down payment.

The appellate court explained that the presumption applies because marriage is a partnership in which any property transferred into a joint ownership (such as the marital home) furthers that partnership. The appellate court ruled that the trial court was in error not to apply that presumption.

The case was returned to the trial court to apply the presumption and determine whether the marital presumption had been overcome by clear and convincing evidence. It also stated that the court could, at its discretion, receive more evidence on the issue of the mother’s intent.

If you are considering divorce, a knowledgeable family law attorney can help you advocate for the kind of property division you want. Contact the experienced Denver family law attorneys at Plog & Stein.