Marital Agreements Under Colorado Law
The "Colorado Marital Agreement Act" was adopted by the state of Colorado in 1986. That statute, along with subsequent court cases, provide the majority of the law that governs marital agreements in the state of Colorado. A marital agreement can be either a prenuptial agreement, or a postnuptial agreement. Enforceability: For a marital agreement in Colorado to be enforceable, the agreement must have the following elements: (1) The marital agreement must be in writing (C.R.S. § 14-2-303). (2) The parties must enter into the contract voluntarily (C.R.S. § 14-2-307(1)(A)). (3) There must be a fair and reasonable disclosure, by both parties, of their assets and liabilities before executing the document. (C.R.S. § 14-2-307(1)(B)). (4) The marital agreement cannot be unconscionable (C.R.S. § 14-2-307(1)(C)). (5) The terms of the marital agreement cannot be in violation of public policy, and cannot violate any laws. (C.R.S. § 14-2-304(1)(i)). Cannot Cover Child Support: A marital agreement can only go so far - Colorado law specifically states that a marital agreement cannot adversely affect he right of a child to child support. Thus, a marital agreement cannot be used to predetermine the rights of a child to support in the event of divorce. (C.R.S. § 14-2-304(3)). Effective Date: A prenupital marital agreement must be signed before the marriage takes place, but becomes effective once the marriage ceremony has taken place. A postnuptial marital agreement is signed after the marriage has already taken place, and becomes effective once it is signed. A postnuptial agreement must be signed before divorce proceedings are initiated. (C.R.S. § 14-2-305).
Reasons to Have a Marital Agreement: There are two time periods when a marital agreement really matters - (1) upon divorce, or (2) at death. Most people think of marital agreements in the context of a divorce, to protect their assets from walking out the door with their ex-spouse. Another likely scenario arises where a couple wishes to ensure that their property passes to someone other than their spouse at their death. Consider the following example - Wife has two children from a former marriage. She met Husband later in life, and they decided to marry. Although Wife and Husband are very much in love, Wife wants to make sure that the bulk of her estate passes to her children at her death. A marital agreement can be used to ensure that her wishes are carried out upon her death. Separate Property v. Marital Property: Colorado law divides the property of a married couple into three separate piles: (1) the separate property of the husband, (2) the separate property of the wife, and (3) marital property. Any property owned by the husband or wife prior to their marriage is their separate property. Any assets acquired after the date of the marriage is marital property. What most people don't realize is that any appreciation in separate assets is marital property. Upon divorce, the court can divide the property in the most equitable manner, including dividing the separate property of either spouse. Consider the following example - Husband owns stock worth $800 as of the date of his marriage. During the course of the marriage, the stock appreciates in value to $1,000. The original $800 is still the Husband's separate property, but the $200 of appreciation is marital property. Terms of a Marital Agreement: Each marital agreement is unique, and will have unique terms. Marital agreements can be used to establish the amount that each spouse will receive upon death or divorce, the amount of alimony that will be paid upon divorce, or simply to segregate specific assets. The terms of a marital agreement will generally be honored so long as they are openly negotiated, and the terms are not unconscionable. Timing is Critical: The timing of a marital agreement can be as critical as the terms. For instance, if a marital agreement is signed too far in advance of the wedding, a spouse could argue that it did not accurately reflect his or her wishes (or the property of the other spouse) at the time of the marriage. On the other hand, if the marital agreement is executed too close to the wedding, either spouse can raise the issue of durress, or claim that they had inadequate time to read and understand the agreement. Prenuptial Agreement v. Postnuptial Agreement: Marital agreements come in two types - prenupital agreements, which are signed before a couple weds, and postnuptial agreements, which are signed after the marriage ceremony has taken place. While both types of agreements are valid, the spouse requesting the agreement often has more leverage prior to the marriage. Full Disclosure and Attorneys: Both the terms of a marital agreement and the process used to arrive at those terms can be scrutinized by a court. For that reason, it is imperative that each spouse make full disclosure of all of their assets at the time the agreement is signed. Failure to make full disclosure can result in the entire agreement being unenforceable, or in the undisclosed assets not being protected by the agreement. It is equally important that both parties be represented by separate legal counsel, to ensure that both parties understand their rights and obligations before signing the document. A court is much more likely to uphold an agreement that has been openly negotiated, where both sides are represented by legal counsel, and where both sides have made full disclosure of their assets.