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What you need to know about investments during divorce

Peter B. Goldstein, Esq.

In Colorado, as soon as you file a Petition for Dissolution of Marriage or are served with one, an injunction automatically enters that prohibits either party from “from transferring, encumbering, concealing or in any way disposing of, without the consent of the other party or an Order of the Court, any marital property, except in the usual course of business or for the necessities of life.”  What does this mean?  It means that unless making investments is part of your job, or even if it is, you should not be making investments during your divorce unless you have notified the other party of your proposed expenditure and gotten approval.  Otherwise, the other party could file a motion asking the court to hold you in contempt and punish you for having violated the court’s order, or he or she could ask the court to order you to pay back the funds spent on the investment.

It is important to keep in mind that until you get to a final hearing in the divorce, the court in your case is likely to presume that all of the parties’ assets are marital, that is, jointly owned.  The purpose of the automatic injunction is to ensure that neither party dissipates those assets or takes on new debt unless they must do so in order to survive or unless they mutually agree. 

When in doubt, if you feel an investment or transfer of assets during divorce is necessary, say, to avoid a loss or realize a gain, confer with your spouse, or have your attorney confer with opposing counsel.  Generally, profits or losses on investments incurred during the marriage will be treated as marital in nature, to be shared, but there are exceptions.  To understand more about what those exceptions might be, speak with your counsel.

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