A recent decision by the Colorado Supreme Court illustrates one of the many financial complexities of divorce.
On January 13, 2014 the Colorado Supreme Court handed down a decision in case no. 11SC59, a review of the divorce and distribution of marital property ruled on by a Colorado trial court and subsequently by the state court of appeals. The resolution of this case highlights one of the many potential financial difficulties associated with the dissolution of marriage.
In this case, the petitioner Marta Cardona (the wife) and respondent Jaime Castro (the husband) elected to dissolve their marriage in May of 2007. Their principal area of financial dispute was the husband’s unpaid vacation leave. The wife eventually argued that this leave was marital property and should be distributed along with the dissolution of the estate. The husband disagreed.
According to records for the case, the first mention of the vacation leave by the petitioner noted that her husband had accrued 452 hours of combined vacation and sick leave, valued at over $23,000. At the time of the wife’s initial proposed division of the estate, she did not seek a share of this value. Instead, she wished to be permitted to move to Florida with the children. She initially suggested that the vacation time not be regarded as a marital asset, but instead as an economic circumstance that would allow the husband to travel across country for some parenting time with his kids in Florida.
When asked to testify about the leave, the husband explained that the vacation time had been accumulated from year to year and informed the court that, to the best of his knowledge, any unused portion would only be paid if his job was terminated.
A year later, the wife reissued her petition with several changes, including a new request that the court award her one half the value of the unpaid vacation, more than $11,500. By this time she had relocated to Florida with the children. Meanwhile, the husband maintained his original position that the leave was not a marital asset. The divided court of appeals panel sided with the husband, but one judge dissented and the case was sent to the Colorado Supreme Court for review.
In Colorado, the legal guidelines for divorce proceedings are found within the state’s statutes under the Uniform Dissolution of Marriage Act (UDMA). The higher court upheld the appeals court decision by focusing on section 14-10-113, C.R.S. (2013), of the UDMA, which asks the court “to make an equitable distribution of marital property after considering all relevant factors,” including spousal contributions and changes in the value of combined property over the course of the marriage.
In its key argument, the court pointed out that whatever the husband’s testimony regarding the circumstance under which he might or might not receive payment for his vacation time, “nothing in the record established that [the husband] had an enforceable right to receive any sort of cash payout for such time.” Thus, the unpaid leave should continue to be regarded as an economic circumstance rather than a marital asset, and should not be divided between the husband and wife in the divorce.
This case – having passed before trial, appeals, and supreme court judges – points to just one of the innumerable areas of dispute that could cause a divorce case to languish in the courts. A situation such as this one has the potential to drain the participants’ assets and squander valuable time rather than to move things swiftly toward a fair and equitable resolution. Typically, such areas of conflict are initially far less recognizable to the participants than they would be to a well informed and trained outsider. Please consider consulting an attorney or certified public accountant when faced with such difficult circumstances.