By: Nicole Vette, Anderson & Baker, LLC
In Colorado, parties to a divorce proceeding are required to exchange full disclosure of their assets and liabilities. Both parties owe each other a duty of full and honest disclosure of their finances, which is set forth in Colorado Rule of Civil procedure 16.2(e)(1) and 16.2(e)(2). If a former spouse did not provide the required asset and liability disclosure to his or her spouse during the divorce, or misrepresented his or her assets or liabilities during the divorce, then the other party may be entitled to relief. The Colorado Rules of Procedure (specifically rule 16.2(e)(10)) provide that if a party has misstated his or her assets during the divorce or omitted the disclosure of assets or liabilities in the dissolution process, then the court has a five year window within which to reopen the case to allocate the omitted asset or debt. The misstatement or omission must have a material impact on the prior division of the assets and debts.
However, it is important to be very specific regarding what was omitted or misrepresented, if a party intends to approach the court for reallocation of the omitted or misstated asset or debt. In a recent Court of Appeals case, the former Wife argued that the former Husband had likely failed to disclose all of his assets. The Wife wanted to review financial documents to determine if her suspicions were correct. The trial court refused this request and dismissed her motion. The Court of Appeals affirmed the trial court’s ruling and indicated that the rule of procedure allowing for allocation of omitted or misstated assets was not intended as a means for a former spouse to review the financial documents of the other former spouse to determine if there was inappropriate disclosure. The take-away from that Court of Appeals opinion is that it is important to review the financial documents carefully and be diligent in following up on vague disclosures in the original dissolution process prior to entering into a separation agreement. If you attempt to re-open the case within the five year look-back window, it is best to have specific grounds for doing so, and information about what was specifically misstated or omitted.
Courts have reopened asset division even in cases where the asset that was not disclosed was merely speculative in nature at the time of the divorce. In the case that established this precedent the former husband did not disclose to wife at the time of the divorce that the company he worked for, and in which he held an ownership stake, might be purchased in the future. Months after the divorce, the former husband’s company was purchased. The Court of Appeals reopened the division of assets in the case, holding, among other things, that the former husband had a duty to disclose even this potential future increase in value during the divorce proceedings.
Disclosure rules are complex, and depend on the specific facts of the case.