Property Division Workbook
A Hands-On Guide to Organizing Your Marital Estate
An interactive workbook to help you inventory, categorize, and value marital assets and debts. Includes worksheets, checklists, and guidance on complex assets.
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What You'll Learn
Guide Contents
Chapter 1: Introduction: Understanding Property Division
Property division is often one of the most complex aspects of divorce. Colorado is an "equitable division" state, meaning marital property is divided fairly, though not necessarily equally. **Why This Workbook?** This workbook will help you: - Create a comprehensive inventory of assets and debts - Understand what's marital vs. separate property - Gather documentation you'll need - Prepare for discussions with your attorney - Think strategically about division options **Before You Begin** Gather as many financial documents as you can: - Bank statements (all accounts) - Investment account statements - Retirement account statements - Tax returns (3-5 years) - Property deeds and mortgage documents - Vehicle titles - Credit card statements - Loan documents - Insurance policies - Business financial statements (if applicable) Take your time with this workbook. Accuracy is more important than speed.
Chapter 2: Part 1: Marital vs. Separate Property
Understanding this distinction is crucial to property division. **Marital Property (Subject to Division)** Generally includes all assets and debts acquired during the marriage: - Income earned by either spouse - Retirement contributions during marriage - Real estate purchased during marriage - Vehicles, furniture, and belongings acquired during marriage - Business interests developed during marriage - Debts incurred during marriage - Increase in value of separate property due to marital efforts **Separate Property (Generally Not Divided)** - Assets owned before marriage - Inheritances received by one spouse - Gifts given specifically to one spouse (not from the other spouse) - Property excluded by a valid prenuptial or postnuptial agreement - Personal injury settlements (for pain and suffering, not lost wages) **Commingling Warning** Separate property can become marital if it's mixed with marital assets: - Depositing an inheritance into a joint account - Using premarital savings for marital expenses - Putting your spouse's name on a pre-owned asset - Using marital income to improve separate property **Documentation Is Key** To claim something as separate property, you need to trace it: - Original ownership documents - Account statements showing the asset before marriage - Gift letters or estate documents for inheritances - Paper trail showing the asset was kept separate **Gray Areas** Some property is harder to classify: - Appreciation of separate property during marriage - Business started before marriage but grown during - Premarital home where mortgage was paid during marriage - Retirement accounts with contributions from before and during marriage
Chapter 3: Part 2: Asset Inventory Worksheet
Use this guide to inventory all assets. Be thorough—it's better to list too much than miss something. **REAL ESTATE** For each property, document: - Property address - Current fair market value (estimate) - Outstanding mortgage balance - Whose name is on title - Whose name is on mortgage - Date acquired - Down payment source - Marital or separate property? **BANK ACCOUNTS** For each account: - Bank name and account type - Account number (last 4 digits) - Current balance - Whose name is on account - Marital or separate funds? **INVESTMENT ACCOUNTS** For each account: - Institution name - Account type (brokerage, CD, etc.) - Current balance - Whose name is on account - Any restrictions on withdrawal? **RETIREMENT ACCOUNTS** For each account: - Institution and account type (401k, IRA, pension) - Current balance - Whose name is on account - Balance at date of marriage (if possible) - Vesting status **VEHICLES** For each vehicle: - Year, make, model - Current fair market value - Outstanding loan balance - Whose name on title - Who primarily drives it **PERSONAL PROPERTY** Major items: - Jewelry (appraisals if available) - Art and collectibles - Furniture (major pieces) - Electronics - Sporting goods/equipment - Musical instruments **BUSINESS INTERESTS** - Business name and type - Ownership percentage - Estimated value - When started/acquired - Role in the business **OTHER ASSETS** - Life insurance (cash value) - Stock options - Restricted stock units - Intellectual property - Tax refunds expected - Money owed to you - Frequent flyer miles, rewards points - Cryptocurrency - Timeshares - Club memberships
Chapter 4: Part 3: Debt Inventory Worksheet
Debts acquired during marriage are generally divided along with assets. **MORTGAGES AND HOME EQUITY** - Lender name - Current balance - Monthly payment - Interest rate - Whose name is on loan **VEHICLE LOANS** - Lender name - Current balance - Vehicle securing the loan - Whose name is on loan **CREDIT CARDS** For each card: - Card issuer - Current balance - Interest rate - Whose name is on account - Joint or individual account **STUDENT LOANS** - Lender name - Current balance - Whose name is on loan - When loan was taken out (before or during marriage) - What education it funded **PERSONAL LOANS** - Lender name - Current balance - Purpose of loan - Whose name is on loan **OTHER DEBTS** - Medical bills - Tax debts - Legal fees - Personal loans from family - Business debts - Back child support or alimony (from prior marriage) **IMPORTANT NOTES ON DEBT** - Joint debts remain joint legally—divorce decree only allocates responsibility between spouses - Creditors can pursue either person on joint debt regardless of divorce decree - Consider refinancing to remove one spouse from joint debts - Document any debts your spouse incurred without your knowledge
Chapter 5: Part 4: Valuation Considerations
Accurate valuation is essential for fair division. **Valuation Date** Colorado typically uses the date closest to division, but other dates may apply: - Date of separation - Date of filing - Date of decree - Another date if parties agree **Real Estate Valuation** Options include: - Formal appraisal (most accurate, costs $300-500+) - Comparative Market Analysis from realtor (free, less precise) - Online estimates (Zillow, etc.) - use cautiously - Agreed value between parties **Retirement Account Valuation** - Request statements as of valuation date - Consider vesting status - Account for any taxes that would be due on withdrawal - 401(k)s and pensions may require QDRO for division **Vehicle Valuation** - Kelley Blue Book private party value - NADA guides - Carfax value estimates - Account for condition, mileage **Business Valuation** Complex and often requires professional: - Multiple valuation methods - May need forensic accountant - Consider goodwill - Look at several years of financials **Personal Property** - Replacement value for insurance - Garage sale value for most items - Appraisals for valuable jewelry, art, collectibles - Usually not worth fighting over **Important Principles** - Fair market value, not what you paid - Net value = gross value minus debt - Consider tax implications of liquidating assets - Some assets are more liquid than others - Future value isn't guaranteed
Chapter 6: Part 5: Complex Assets Guide
Some assets require special handling in divorce. **RETIREMENT ACCOUNTS** *401(k) and 403(b) Plans* - Divided via Qualified Domestic Relations Order (QDRO) - No tax penalty if transferred properly - Receiving spouse can roll to their own IRA - Plan administrator has specific requirements *Pensions* - May need actuarial valuation - Options: divide benefits at retirement, or offset with other assets - Survivor benefits considerations - Complex if already in pay status *IRAs* - Divided by transfer incident to divorce - No QDRO needed, but must follow IRS rules - Taxed when withdrawn **BUSINESS INTERESTS** *Valuation Challenges* - Multiple methodologies (income, asset, market) - Goodwill may or may not be divisible - Consider minority discounts - Need qualified business valuator *Division Options* - One spouse buys out the other - Sell the business and divide proceeds - Continue to co-own (rarely advisable) - Structured buyout over time **STOCK OPTIONS AND RSUs** *Unvested Options* - May be marital property even if not yet vested - Various approaches: divide at exercise, reserve jurisdiction, offset - Tax implications vary based on type (ISO vs. NSO) *Restricted Stock Units* - Usually divided based on "time rule" - Portion earned during marriage is marital - Consider vesting schedule **REAL ESTATE** *The Family Home* - Sell and divide proceeds - One spouse buys out the other - Deferred sale (common when children involved) - "Nesting" arrangement *Investment Property* - Rental income considerations - Capital gains implications - Management responsibilities - May be best to sell **CRYPTOCURRENCY** - Highly volatile—valuation date matters - Divided like other assets - Security and access issues - Tax implications
Chapter 7: Part 6: Hidden Asset Red Flags
Be alert to signs that a spouse may be hiding assets. **Warning Signs** *Financial Behavior Changes* - Suddenly secretive about finances - Mail being redirected - New passwords on accounts - Taking control of financial records *Income Red Flags* - Self-employment with cash income - Deferred compensation or bonuses - Loans to friends or family - Overpayment of taxes (to get refund later) - Paying down business "debt" to partners *Expense Red Flags* - Unexplained cash withdrawals - Purchases that disappear - Gifts to family members - Payments to unknown parties *Business Owner Red Flags* - Salary cuts just before divorce - New "employees" who are friends/family - Delayed billing for services - Inflated business expenses - Cash businesses with declining revenue *Other Concerns* - Cryptocurrency holdings - Safe deposit boxes - Storage units - Property in other names - Overseas accounts **What To Do** *Document Everything* - Copy financial records before separation - Note any suspicious activity - Keep records of lifestyle expenses - Save account statements *Discovery Process* Through your attorney: - Subpoena bank and brokerage records - Request tax returns - Depose your spouse - Hire forensic accountant if warranted *Legal Consequences* - Hiding assets is illegal - Court can award greater share to wronged spouse - Perjury charges possible - Contempt of court sanctions - Case can be reopened if fraud discovered later **Important Note** If you suspect hidden assets, work with your attorney. Don't: - Access accounts illegally - Hire private investigators without guidance - Make accusations without evidence
Chapter 8: Part 7: Tax Implications
Tax considerations can significantly impact the value of assets and the fairness of division. **PROPERTY TRANSFERS** Good news: Transfers between spouses incident to divorce are tax-free. This includes: - Real estate - Investment accounts - Most other assets However, the receiving spouse takes the original cost basis, meaning they'll owe more in capital gains taxes when they sell. **EXAMPLE:** - House purchased for $200,000 - Now worth $500,000 - If you receive the house, your basis is $200,000 - If you sell for $500,000, you'll owe taxes on $300,000 gain - (Less $250,000 exclusion if it was your primary residence) **RETIREMENT ACCOUNTS** *Pre-Tax vs. Roth* - $100,000 in a 401(k) is not worth $100,000 after taxes - $100,000 in a Roth IRA is worth $100,000 tax-free - Consider after-tax value when comparing assets *Early Withdrawal* - Normally, withdrawal before 59½ incurs 10% penalty - Exception: QDRO transfers are penalty-free for 401(k) - Still owe income taxes on distribution **CAPITAL GAINS** *Short-Term vs. Long-Term* - Assets held less than one year: ordinary income rates - Assets held more than one year: preferential rates (0%, 15%, or 20%) *Cost Basis* - Know the cost basis of any asset you receive - Request this information during discovery **ALIMONY/MAINTENANCE** For divorces finalized after December 31, 2018: - Payer cannot deduct maintenance - Recipient does not pay taxes on maintenance - This is a significant change from prior law **FILING STATUS** - Your status on December 31 determines the whole year - May file jointly or separately in year of divorce - If divorced by year end, must file as single or head of household - Head of household status requires meeting specific requirements **PROFESSIONAL HELP** Consider consulting a CPA or tax attorney for: - Complex asset division - Business interests - Stock options and RSUs - Significant retirement accounts - High-income situations
Chapter 9: Part 8: Division Strategies
Think strategically about what you want and why. **APPROACHES TO DIVISION** *Simple Split* - Divide everything 50/50 - Works when: assets are liquid, similar in nature *Offset Method* - One spouse gets one asset, other gets different asset of similar value - Example: You keep the house, I keep retirement accounts of equal value - Advantage: Clean break, less ongoing entanglement *Buy-Out* - One spouse pays other for their share - Common with houses and businesses - May require refinancing or payment plan *Deferred Division* - Delay dividing certain assets - Common with family home when children involved - May maintain joint ownership of business temporarily **WHAT TO CONSIDER** *Liquidity* - Cash is more flexible than other assets - Consider whether you can access an asset's value - Retirement accounts have restrictions *Future Value* - Will the asset appreciate or depreciate? - Don't trade current assets for speculative future value - Consider risk of each asset *Emotional Attachment* - Is it worth the cost to keep? - Sometimes letting go is financially smarter - Don't fight for things just to "win" *Tax Consequences* - What's the after-tax value? - When will taxes be owed? - Can taxes be minimized? *Practical Considerations* - Can you afford to maintain the house alone? - Does keeping a business mean ongoing ties to your ex? - What do you actually need vs. want? **COMMON MISTAKES** *Fighting for the House When You Can't Afford It* - Mortgage, taxes, insurance, maintenance - Opportunity cost of equity tied up - Emotional attachment vs. financial reality *Ignoring Retirement* - Retirement accounts are crucial - Don't sacrifice long-term for short-term *Not Accounting for Taxes* - $100,000 in different assets has different after-tax values - Think in after-tax terms *Forgetting About Debt* - Assets aren't worth their gross value - Net value matters - Joint debt remains joint to creditors **GET PROFESSIONAL HELP** Complex property division benefits from: - Experienced family law attorney - CPA or tax advisor - Financial planner - Business valuator (if needed) - Real estate appraiser (if needed)
Table of Contents
- 1.Introduction: Understanding Property Division
- 2.Part 1: Marital vs. Separate Property
- 3.Part 2: Asset Inventory Worksheet
- 4.Part 3: Debt Inventory Worksheet
- 5.Part 4: Valuation Considerations
- 6.Part 5: Complex Assets Guide
- 7.Part 6: Hidden Asset Red Flags
- 8.Part 7: Tax Implications
- 9.Part 8: Division Strategies
- 10.Appendix: Documentation Checklist
Who This Guide Is For
Anyone preparing for property division in divorce
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