If 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.
Several years ago, the Colorado Supreme Court changed the rules regarding resolution of domestic relations cases by enacting C.R.C.P. 16.2. In addition to various procedural changes, there are heightened affirmative disclosure requirements and a provision that allows the court to reallocate assets or liabilities in the event that one party makes material misstatements or omissions in his or her financial disclosures to the other.
Prior to this new rule, parties were required to submit affidavits, tax returns, pay stubs and more to corroborate their financial disclosures. They weren’t under the obligation to disclose all material facts and so the party receiving the disclosure had to verify through a diligent inquiry whether or not the disclosure was accurate. With the new rule, the party submitting the financial disclosure bears the burden of ensuring that the disclosure in accurate. The reasoning behind this is that a married couple has a fiduciary relationship in which each owes the other and the court a candid disclosure of facts that materially impacts the division of assets, their own rights and those of their children.
With the new rule on disclosures came an extension on the court’s jurisdiction after a divorce decree to reallocate assets and liabilities if it was discovered after the fact that either party didn’t comply with his or her affirmative duties. This was a much longer period of jurisdiction than the six months previously permitted.
In 2010, the court addressed the issue of whether this new rule applied to modify property divisions that arose from the old disclosure agreements in a set of three factually similar cases. In each of those cases, a husband and wife filed a petition to divorce. The court divided the marital property based on the financial disclosures of each party. In all three cases, after the division, the wife came back to the court, claiming her husband’s financial disclosures did not accurately state the true value of particular assets.
For example, in one case, the husband listed the value of his businesses as $0, noting that it might be inaccurate due to some unknown values. The wife argued that her former husband was aware his businesses were worth millions more than $0 and she had relied on his representations. In another case, a husband allegedly misrepresented the premarital share of a pension. The court determined in each case that the new rule could not apply back to reopen property divisions based on the old law.
Divorces are often difficult experiences, in which it is easy to lose track of deadlines or items of property to disclose. But under the new rule, each party bears the burden of being scrupulous and honest in financial disclosures, in spite of the stress that accompanies divorce. If you have questions about your former partner’s financial disclosures or a marital division of property in the dissolution of your marriage, you should consult with a trustworthy family law attorney. A good family law attorney can help you file, ensure that your financial disclosures are accurate, and give you a sense of how the court is likely to see your case. Contact the experienced Denver family law attorneys of Plog & Stein, P.C..