Colorado is a no-fault state, and the property statute says so in plain terms: the court divides marital property "without regard to marital misconduct." An affair does not change the split. Money spent on the affair can. Colorado courts have recognized "economic fault" for decades, and when one spouse deliberately drains the marital estate, the court can treat the missing money as if it were still there and charge it against that spouse's share.
The catch is that dissipation is narrower than most people think, the burden of proving it starts with the spouse who raises it, and timing decides most of these fights.
What Dissipation Is, and What It Is Not
In re Marriage of Jorgenson (Colo. App. 2006) is the anchor. A husband quietly stopped paying rent on the family business's commercial lease while money was available, hid part of a settlement his wife had received, and left her no chance to limit the damage. The court affirmed loading the resulting liability entirely onto him. The key words were deliberate, concealed, and without the other spouse's knowledge or consent.
Under In re Marriage of Finer (1996), the question is whether the money was spent "for a proper or for an illegitimate purpose." Conduct that Colorado courts have treated, or would readily treat, as dissipation includes:
- Spending marital money on a romantic partner: travel, gifts, rent on a second apartment.
- Gambling losses that were hidden or far outside the couple's established pattern.
- Transfers of property or cash to parents, siblings, or adult children for no consideration once divorce is on the horizon.
- Selling property or liquidating accounts and failing to account for the proceeds, or parking marital assets in a trust or entity to keep them out of reach.
What is not dissipation: ordinary living expenses at the marital standard, a bad investment made in good faith, a business that lost money, and spending the other spouse knew about and accepted at the time. Colorado courts do not audit a marriage for poor judgment. In re Marriage of Schmedeman (2008) held that before a divorce is filed, a spouse may give marital property to a third party even over the other spouse's objection, so long as the purpose is not improper.
Timing: "In Contemplation of Divorce"
A gift to a struggling brother three years before anyone mentioned divorce is a gift. The same gift the month after a spouse says "I want out" looks very different. In re Marriage of Paulsen and In re Marriage of Posinoff (both 1984) let trial courts add back property a spouse disposed of before the petition was filed, when the disposal was made in contemplation of the divorce.
The 2024 decision in Rios de Martinez v. Landaverde pushed the reach further. A husband quitclaimed appreciated real estate to his adult children for nothing after his wife had threatened divorce. The Court of Appeals held that a spouse can be a "creditor" under the Colorado Uniform Fraudulent Transfer Act once the transferring spouse has reason to know a divorce is imminent, which opens a separate civil claim to unwind the transfer against the people who received it. The court refused to draw the line at the filing date because that would reward preemptive transfers.
The Automatic Temporary Injunction
Once a case is filed, the analysis changes. Under C.R.S. § 14-10-107(4)(b), a temporary injunction takes effect against the petitioner on filing and against the respondent on service. It restrains both parties from "transferring, encumbering, concealing, or in any way disposing of" marital property without consent or a court order, except "in the usual course of business or for the necessities of life," and it requires notice of any proposed extraordinary expenditure and an accounting to the court for extraordinary expenditures made while it is in effect.
Two consequences follow. First, the burden flips: under In re Marriage of Meisner (1985), the spouse who spends after the injunction is in effect must show the spending fit an exception. Second, a violation is a court-order violation, enforceable through contempt, whether or not it also amounts to dissipation.
Those are separate questions, and In re Marriage of Smith (2024 COA 95) shows the gap. A wife sold roughly $4 million of stock during the case without her husband's consent. She violated the injunction, but she did not dissipate anything, because the proceeds paid down a secured credit line tied to a home purchase the parties had agreed on. Economic fault requires more than unilateral action; it requires an intentional depletion of the estate for an improper purpose.
How the Court Accounts for Dissipated Money
Colorado does not award punitive damages for dissipation. The remedy is arithmetic. Under Finer and Posinoff, the court values the dissipated asset as of the time it existed, adds that value back into the marital estate, and divides the whole, treating the dissipating spouse as having already received the missing amount.
A round-number example: the remaining estate is $600,000, and the court finds a husband spent $80,000 on an affair in the eighteen months before filing. The court treats the estate as $680,000. If an equal division is otherwise fair, each share is $340,000; the husband has already consumed $80,000, so he receives $260,000 of what is left.
The same logic applies to debt. In In re Marriage of Capparelli (2024 COA 103M), a husband ran up a line of credit during the case on spending "far in excess of any reasonable needs." The trial court could not reclassify that borrowing as his separate debt, because a debt incurred during the marriage is marital by definition. What it could do was allocate the debt to him. The label stays marital; the allocation carries the consequence.
Where property has gone into a trust, the court can look through it. In Kaladic v. Kaladic (1978), a wife moved marital assets into an irrevocable trust eleven months before filing; the court treated the transfer as illusory and ordered the trustee to pay the husband's share.
How to Prove It, and How to Defend It
The spouse alleging dissipation goes first: identify the specific withdrawals, transfers, or sales, show when they happened relative to the breakdown of the marriage, and show they were not ordinary living expenses. Then the spending spouse has to explain where the money went. Under Posinoff, the accusing spouse's inability to trace exactly where withdrawn funds ended up does not defeat the claim; the spouse who took the money is the one who has to account for it.
The evidence that carries these cases is documentary:
- Bank, brokerage, and credit-card statements for the two to three years before filing, obtained through C.R.C.P. 16.2 disclosures and, where needed, subpoenas.
- Payment-app histories, wire confirmations, cash withdrawals, and casino win/loss statements.
- Recorded deeds and entity filings showing transfers to relatives or new companies.
- Texts, emails, and travel records that tie the spending to a purpose and a date.
- A before-and-after comparison of balances, and a forensic accountant when the pattern is large or layered.
Credibility matters. In Jorgenson, the husband's lack of credibility was the first item on the list of evidence supporting the finding. A spouse who produces records without a fight is in a far stronger position than one who stonewalls.
If you are the one accused, remember that most dissipation claims fail because most spending is ordinary. Business expenses, taxes, tuition, medical bills, reasonable attorney fees, and household support are legitimate purposes, and spending that matched the couple's established lifestyle is hard to attack even if it was lavish. Once a case is filed, keep spending inside the pattern, give written notice before any extraordinary expenditure, do not move money without consent or an order, and keep receipts. The injunction does not stop life; it stops surprises.
Talk to a Denver Divorce Attorney About Dissipation
Aaron Herzberg is a divorce attorney in Greenwood Village, Colorado, serving Denver and the Front Range, with more than 30 years of trial experience and a practice focused on divorce, custody, and financially complex family law. Dissipation claims are won or lost on records that disappear quickly, so the time to gather statements and lock down accounts is before the petition is filed, not after. A first meeting is a paid consultation, not a free call and not a sales pitch.
Read the full guide on DenverDivorce.com: Property Division in Colorado.
Educational information only, not legal advice. Reading this article does not create an attorney-client relationship.
