In re Marriage of Capparelli.
2024 COA 103. No. 23CA1114. Dissolution of Marriage—Property Disposition—Property Purchased During the Marriage—Marital Debt—Maintenance.
September 19, 2024
Husband and wife were married for 16 years. Husband was unemployed during the last 10 years of their marriage, but he inherited close to $1.5 million that he invested to produce income. Wife was employed throughout the marriage and earned over $195,000 a year during the two years immediately preceding the dissolution. In dividing the marital estate, the court considered whether proceeds from the sale of the marital home and a line of credit debt against one of husband’s investment accounts should be considered marital property. As to the marital home, the court found that wife presented sufficient evidence to trace funds used to purchase the marital home to her pre-marriage ownership of another property and gifts from her mother. As to the line of credit debt, the court found that husband used part of it to pay for his living expenses, but that his spending exceeded any reasonable needs. The court thus awarded wife a separate property interest of $288,609 in the marital home and designated $63,077 of the credit debt as husband’s separate debt. The court then awarded husband maintenance of $2,195 per month for eight years and two months. The district court dissolved the parties’ marriage and entered permanent orders.
On appeal, husband contended that the district court erred in classifying the marital property and designating $288,609 of the proceeds from the sale of the marital home as wife’s separate property. When a spouse places separate property in joint ownership during a marriage, there is a presumption that the donor spouse intended to gift the property to the marriage and that the gifted property is marital property, absent clear and convincing evidence to the contrary. While tracing funds is necessary to support a finding of separate property, it is insufficient by itself to rebut the presumption that the separate property was a gift to the marriage. Here, wife presented evidence tracing a portion of the marital home back to her separate premarital property, but she did not present evidence other than this tracing that the parties intended for any portion of that asset to remain her separate property. Therefore, wife did not overcome the presumption, and the district court erred in classifying a portion of the marital home as wife’s separate property.
Husband also argued that the district court erred by designating $63,077 of the line of credit debt as his separate liability. While the court may consider the parties’ economic fault when dividing marital property, the character of a debt as marital or separate depends on when it was acquired, and debt incurred during a marriage is marital debt. Here, the line of credit debt was incurred during the marriage, so it is marital debt. Accordingly, to the extent the court made findings about how husband spent money in excess of his reasonable needs, this consideration concerns the court’s determination of an equitable allocation of the marital debt but does not allow the court to exclude the debt from the marital estate. The district court thus erred in designating the line of credit debt as husband’s separate liability.
Husband further contended that the district court erred in determining the maintenance award by averaging wife’s annual salary for the two years immediately preceding the permanent orders hearing and by imputing income to him. Given the reversal of the property and debt division, the district court must reconsider maintenance, taking into account the revised property division and the parties’ current health and economic circumstances.
The judgment was reversed, and the case was remanded for the district court to reconsider the entire property and debt allocation. The district court must also reconsider maintenance, based on the revised property division and the parties’ then-current physical and economic circumstances.
The full opinion is available at https://www.coloradojudicial.gov/system/files/opinions-2024-09/24CA0250-PD.pdf.