Colorado Prenuptial Agreement

Colorado Prenuptial Agreement

A Colorado prenuptial agreement allows couples to agree in advance about how property is to be split upon divorce. Without a Colorado prenuptial agreement, the Colorado courts decide how property will be divided upon divorce.

Colorado is a separate property state. In a separate property state, property is typically “owned” by the person who is in title. For example, real estate in the name of one spouse is usually considered to be the separate property of that spouse. An inheritance kept in a separate account is considered the separate property of the account holder. However, for purposes of divorce, Colorado uses the broad concept of marital property to equitably divide what would otherwise be considered the separate property of a spouse.

The full definition of marital property is too complex for a quick an easy explanation. Suffice it to say, the increase in the value of separate property is typically considered marital property and fair game for division by the divorce court. Property titled in both spouses’ names is often considered marital property subject to equitable division. The increase in value of an inheritance can also be subject to the marital property rules.

While no couple with wedding plans likes to talk about the marriage failing, many couples are having frank conversations about how property is to be divided upon divorce. The conversation is driven by many factors. Parents often put conditions on inheriting property including the requirement of a Colorado prenuptial agreement. Individuals marrying a little later in life want to protect those hard-earned assets from their biggest creditor (their spouse-to-be). Individuals benefitting from tax-deferred earnings in retirement accounts recognize that post-marriage increases in account value are greatly impacted by pre-marriage contributions. All of these factors are pushing more and more individuals to clearly define who owns what and what will or will not be shared upon divorce.

Not all Colorado prenuptial agreements are enforceable. For a Colorado prenuptial agreement to be enforceable there must be full disclosure of assets, debts and rights upon divorce. The spouse-to-be must know exactly what he or she is giving up. Both individuals should have legal representation even if it means one individual paying for both lawyers. Skimping on financial disclosure, proper asset valuation and proper legal representation can result in the Colorado prenuptial agreement being challenged at a later date.

Besides the division of separate property, a Colorado marital agreement can address many other issues regarding marital rights upon divorce. For example, gifts of family heirlooms (like grandma’s wedding ring), alimony, attorney’s fees, obligation for debts and how ownership of joint property is divided can all be addressed in a Colorado prenuptial agreement.