Transmuted Assets and Colorado Divorces

One of the most complicated elements of getting a divorce in Colorado is that of deciding how assets and debts will be divided amongst the parties to the marriage/divorce. While Colorado law holds that property and debts must be divided in a manner that is equitable, understanding the difference between marital vs. separate assets, how “equitable” is determined, and numerous other considerations can be difficult. Something that can complicate the process even more is that of transmutation. Here’s a look into what you need to know about transmuted assets and Colorado divorce.

Transmuted Assets – What Are Those?

Transmutation is defined as “the action of changing or the state of being changed into another form.” As it applies to property and assets in a marriage, transmutation means that the property has been changed from marital property to separate property, or from separate property to marital property. This can happen for various reasons, including co-mingling, as well as legal actions, like adding a party’s name to a vehicle title. Transmutation can also happen as a result of contract or gift.

Why Does it Matter If Assets Are Transmuted?

If separate assets are transmuted into marital assets, this can have a significant effect on the outcome of your divorce, primarily because separate and marital assets are considered distinct and separate in a Colorado property division settlement. In fact, only marital assets are subject to division; separate assets may be kept separate.

One of the most common ways in which assets are transmuted is via commingling, which happens when marital and separate property become mixed together to such a degree that identifying and separating each becomes impossible. For example, if an inheritance (separate property) is used to purchase the family home (marital property), assets have become commingled.

How to Prevent Transmutation

If you want to keep your property separate and ensure that it is not subject to division during your divorce, it’s important to understand the ways in which transmutation of assets occurs and how to prevent transmutation. Some tips to prevent transmutation include:

  • Keep thorough documentation of all gifts and inheritance received;
  • If you purchased property or assets prior to marriage, track down the details of those purchases, including title information, purchase date, etc.;
  • Make your intentions about your separate property clear – creating an estate plan can be useful for this purpose;
  • Don’t commingle funds – maintain separate bank accounts, don’t use a gift to pay for marital assets or property, etc.;
  • Don’t use any marital funds to maintain property that is separate; and
  • Do not treat any separate property that you have as joint, marital property.

When it comes time to settle your divorce, you may have to prove that your assets are separate and that you had no intent to transmute them. A skilled lawyer with the resources to hire relevant experts can prove extremely helpful at this phase in the process.

Call Divorce Matters Today

Understanding the laws regarding property division can be confusing, especially as they pertain to the transmutation of assets. To schedule your consultation with a knowledgeable divorce lawyer near you, call the offices of Divorce Matters today.