Standards for Tracing Marital Property Back to Non-marital Property

• Publication year: 1988
• Pages: 853
• Citation: Vol. 17 No. 5 Pg. 853

17 Colo.Law. 853 Colorado Lawyer 1988.

1988, May, Pg. 853. Standards for Tracing Marital Property Back to Non-Marital Property

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853

Vol. 17, No. 5, Pg. 853

Standards for Tracing Marital Property Back to Non-Marital Property

by William J. McCarren and Russell K. Bean

In many dissolution cases, one party desires to "trace" current assets back to non-marital property. This process requires proof that the current asset was acquired with the proceeds of, or in exchange for, a non-marital asset. If the party can effectively "trace" the asset, it will be considered non-marital property. Exactly what is required to "trace" assets successfully is not entirely clear. Courts considering the tracing issue often merely state in conclusory language that a party has either met or failed to meet the burden of tracing.

This article explores the tracing requirements and offers suggestions for successfully tracing separate property. It also discusses the standards by which a court will determine this issue.(fn1)

The Tracing Process

Under the Colorado Uniform Dissolution of Marriage Act,(fn2) any property acquired by either spouse subsequent to the marriage is presumed to be marital property unless the spouse claiming that the property is separate can prove that it was acquired by one of four distinct methods.(fn3) The four types of property that will not be considered marital property even though they are acquired subsequent to the marriage are:

1) property acquired by gift, bequest, devise or descent;

2) property acquired in exchange for property acquired prior to the marriage or in exchange for property acquired by gift, bequest, devise or descent;

3) property acquired by a spouse after a decree of legal separation; and

4) property excluded by valid agreement of the parties.(fn4)

A spouse who claims that property is separate by virtue of method number 2 (above) has the burden of proving that this exception applies. This burden can be met by tracing the funds used to purchase the property back to non-marital assets.(fn5)

While the Colorado statute allows a party to overcome the presumption that property acquired after the marriage is marital, it does not state how much of a showing is required. The statute merely states that the "presumption of marital property is overcome by a showing that the property was acquired by a method listed in subsection (2) of this section."(fn6) (Emphasis added.) No Colorado cases have addressed specifically just how much a showing is required.

Tracing in Other States

Of the states that have separate property statutes similar to Colorado's, only a few have interpreted the standards for tracing. Colorado similarly has few decisions on this topic. Therefore, these foreign interpretations must be reviewed to analyze adequately the standards for tracing.

In Missouri, the presumption that property acquired during a marriage is marital may only be rebutted by clear and convincing evidence.(fn7) Missouri is the only state in which tracing is approved and which has defined the standard of proof...