Divorce and Money



If you’re going through a divorce – or think you might be soon – it’s helpful to understand how divorce .and money works. 

A divorce is an emotional life event. Doing what’s best for minor children should
always be the first priority. And once parenting has been decided, the financial issues are ideally
addressed as a business deal. A financial settlement should be fair, not a retribution to your ex-spouse.
When it comes to assets and debts, which is called property in the family law arena, Colorado is an
equitable distribution state. Equitable doesn’t mean equal, it means fair, so a division of property is
intended to be divided in a fair manner. The spouse who has been the primary earner in the marriage or
managed the family finances may feel like it’s fair that they get the majority of the property. But what’s
generally considered fair by objective parties is that the spouse who hasn’t earned as much during the
marriage is more likely to need more of the property than the high earner, who could rebuild assets
after the divorce. Some assets – such as homes or vehicles – have debts related to them. And some
assets have tax ramifications if sold. But transferring assets to one spouse as part of a divorce does not
trigger tax at the time of the divorce. If mutual funds that the couple owns have capital gains if sold, and
the funds are transferred to one spouse as part of a settlement, there won’t be taxes because of the
transfer. When the spouse ultimately sells the funds, the capital gains will be taxable at that time.
Spousal maintenance, which is the same thing as alimony, is a payment from the higher earning spouse
to the lower earning spouse. Colorado has a statutory guideline for spousal maintenance. In
negotiations or a court hearing, there might be a deviation from this guideline. After divorce, both
spouses are generally expected to be gainfully employed at a level commensurate with their education,
capabilities, and health. If a spouse chooses not to be employed, spousal maintenance calculations
might impute earned income. How long spousal maintenance is paid is generally based on the length of
the marriage, usually half the length of the marriage. In the case of a marriage of 20 years or more,
spousal maintenance might be paid until one or both parties are retired, or possibly for life.
Child support is based primarily on the parenting time each parent spends with the children, the income
of each parent, and who pays for childcare and health insurance. Neither child support nor spousal
maintenance is currently tax deductible by the payor or taxable to the recipient.
A divorce is a legal matter. While you may be concerned about the expense of legal advice, it’s best to
consult with an attorney. While the judiciary wants to see fair outcomes in divorces, appealing a final divorce order isn’t easy.

Linda Leitz PHD

Linda Y. Leitz, PhD, CFP®, EA

Peace of Mind Financial Planning, Inc.

Phone: 719-836-8181
Fax: 719-836-8996
Open Monday through Friday 9:00 to 4:00
Closed Federal Holidays







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