J.A.B. (Husband) married Q.H. (Wife) in September 2015 in Colorado. Husband and Wife separated in November 2016, and Husband filed for divorce in Colorado’s Jefferson County District Court in December 2016.

While Husband and Wife were able to resolve most of the disputes in their divorce case through mediation, they could not agree on how to divide and distribute their marital property.

The main dispute centered around an interspousal transfer deed (ITD) Husband signed in connection with Wife’s purchase of a house in California during their marriage. While Wife paid approximately $1 million for the house, the ITD Husband signed conveyed any interest Husband had in the California house to Wife as her separate property.

To further complicate their dispute, the source of part of the money Wife used to buy the California house could be traced back to 11 transfers of money Husband made to Wife in the amount of $296,500 during their marriage. Wife used most of this transferred money to buy the California house.

As Wife was attempting to obtain a loan to help her buy the California house, Wife told Husband that the mortgage company that would be lending her money would not approve her loan unless Husband relinquished his interest in the California house by signing an ITD. The ITD stated that it was a grant deed

executed by [Husband] (grantor) to [Wife], a married woman, as her sole and separate property, (grantee) covering the [California] property being transferred in escrow.

District Court Permanent Orders

During the permanent orders hearing, Husband argued to the district court that the 11 transfers of money were neither loans nor gifts. But because Husband signed an ITD conveying his interest in the California house to Wife “as her sole and separate property,” the district court judge concluded that any marital interest Husband had in the house “was extinguished.” The district court ruled that the California house was Wife’s separate property, and the $82,939 increase in the value of the California house during their marriage was marital property, which the court awarded to Husband.

Colorado Court of Appeals Review

Displeased with the outcome of the case, Husband filed an appeal with the Colorado Court of Appeals, which agreed with the district court that the California house was Wife’s separate property.

Colorado Supreme Court Decision

Husband asked the Colorado Supreme Court to hear his case, which it agreed to do.

In a divorce case in Colorado, the district court is required to “divide the marital property, without regard to marital misconduct, in such proportions as the court deems just after considering all relevant factors.” C.R.S. § 14-10-113(1). Marital property is “all property acquired by either spouse subsequent to the marriage.” C.R.S. § 14-10-113(2).

Colorado’s Uniform Dissolution of Marriage Act recognizes a “presumption of marital property” for “all property acquired by either spouse subsequent to the marriage and prior to a decree of legal separation.” C.R.S. § 14-10-113(3). But this presumption can be overcome by several exceptions, one of which is when “[p]roperty [is] excluded by [a] valid agreement of the parties.” C.R.S. § 14-10-113(2)(d) (emphasis added).

Under the Colorado Uniform Premarital and Marital Agreements Act, which Colorado’s legislature adopted on July 1, 2014, a “marital agreement” is “an agreement between spouses who intend to remain married which affirms, modifies, or waives a marital right or obligation during the marriage or at marital dissolution.” C.R.S. § 14-2-302(2). Colorado law requires that a martial agreement “be in a record and signed by both parties.” C.R.S. § 14-2-306.

The district court and the Colorado Court of Appeals both found that the ITD was not a “valid agreement” under this exception because while Husband signed the ITD, Wife did not. The Colorado Supreme Court agreed that the district court and the court of appeals were correct in finding that the ITD was not a valid and enforceable marital agreement. But the supreme court concluded that the district court and the court of appeals incorrectly determined that the ITD was evidence of Husband’s intent to exclude the property as marital property so that the house would be considered as Wife’s separate property in the event of a divorce.

The Colorado Supreme Court noted that the district court and the court of appeals tried to make new law by adding words to a statute to support their decisions and in doing so incorrectly created a “new ITD exception to the marital property presumption.” The supreme court further emphasized that

there is no ITD exception in section 14-10-113(2)–even if the ITD is accompanied by the conveying spouse’s intent to exclude the property in question from the marital estate.

In re Marriage of Blaine, 2021 CO 13, ¶ 25

The Colorado Supreme Court reversed the judgment of the Colorado Court of Appeals. The supreme court also remanded the case with instructions for the district court to determine whether the ITD may be evidence of one of the other three exceptions to Colorado’s presumption of marital property, including whether the California house was:

  1. property acquired by gift, bequest, devise, or descent (C.R.S. § 14-10-113(2)(a));
  2. property acquired in exchange for property acquired prior to the marriage or in exchange for property acquired by gift, bequest, devise, or descent (C.R.S. § 14-10-113(2)(b)); or
  3. property acquired by a spouse after a decree of legal separation (C.R.S. § 14-10-113(2)(c)).

Lessons Learned

  • A spouse can overcome the presumption of marital property under Colorado law only through one of the four statutory exceptions listed in C.R.S. § 14-10-113(2)(a)-(d).
  • Property–in particular real estate such as a house purchased during a marriage–cannot be excluded from a marital estate (where marital property is subject to equitable division and distribution) alone by a deed signed by one spouse conveying the property to the other spouse as separate property.
  • But a spouse’s act of signing an interspousal transfer deed may be evidence of the spouse’s intent to exclude the property from the marital estate under one of the other three marital property exceptions in C.R.S. § 14-10-113(2)(a)-(c).