Colorado law starts on the inheriting spouse's side. Property received by "gift, bequest, devise, or descent" is separate property under C.R.S. § 14-10-113(2)(a), and a divorce court must set it aside to the spouse who received it. That is the rule most people know. What they do not know is how easily it is given away, usually by the inheriting spouse, usually without meaning to, and usually years before anyone thinks about divorce.
Three things convert an inheritance from protected to divisible: the growth it earns, the account it lands in, and the house it pays for. This article covers each, then turns to inherited trusts, the records that prove the claim, and what the parents who are leaving the money can do on their side.
What "Separate" Actually Protects
The statute protects the inheritance at the value it had when it was received. Everything after that is a different question. Under subsection (4), a separate asset is marital "to the extent that its present value exceeds its value" at acquisition, and under In re Marriage of Foottit (1995), income thrown off by separate property during the marriage is marital. A $300,000 brokerage account inherited in 2016 that is worth $450,000 at the 2026 hearing yields $300,000 of separate property and $150,000 of marital property, before anyone looks at the dividends it paid along the way.
In re Marriage of Krejci (2013) applied that rule to an investment account built from a wife's inheritance: the principal was hers, the appreciation belonged to the marriage. The blog's article on the appreciation trap covers the mechanics; the point here is that "separate" is a floor, not a fence.
The burden of proving that floor sits on the inheriting spouse. The court presumes everything acquired during the marriage is marital, and the spouse claiming an exception has to prove it with evidence, not memory.
Three Ways an Inheritance Stops Being Yours
Each of these has undone a separate-property claim in a Colorado courtroom.
- Depositing it into a joint account or titling it jointly. Under subsection (7)(a), gifts from one spouse to the other are presumed marital, and Colorado courts treat putting separate property into joint ownership as a gift to the marriage. The presumption is rebutted only by clear and convincing evidence that no gift was intended at the time. In In re Marriage of Capparelli (2024), a wife traced a $100,000 gift from her mother into the jointly titled family home and still lost, because she offered no evidence that she had not meant to make a gift to the marriage when she did it.
- Paying down the marital mortgage or buying the family home. Same rule, worse optics. Once inherited cash goes into a jointly owned house, the house is marital and the cash is gone as a separate asset. The court can still weigh the contribution under the statutory factors, and under In re Marriage of Burford (2001) the depletion of separate property for marital purposes is a factor in the division, but a factor is not a refund.
- Commingling it beyond tracing. Separate funds mixed with marital funds in one account so thoroughly that they cannot be identified become marital. The scheduled article on tracing covers how that fight is won and lost.
What does not convert an inheritance: pledging it as collateral for a marital loan (In re Marriage of Corak, 2014), holding it in an account in your sole name, or receiving it after the wedding. Timing during the marriage is irrelevant; the source is what matters.
Inherited Trusts: A Short Version
The blog has a full article on trusts in divorce, so this is the two-paragraph version. A beneficiary's interest in a discretionary trust, where the trustee decides whether and how much to distribute, is not property at all under In re Marriage of Jones (1991); it is an expectancy, though the court may consider it as an economic circumstance. Distributions actually received are separate property, akin to a gift, and then follow the rules above.
A vested interest is different. In In re Marriage of Balanson (2001), the Colorado Supreme Court held that a fixed remainder interest is property, that it is separate property as a gift, and that its appreciation during the marriage is marital. And under subsection (7)(b), any interest under a revocable or amendable instrument, or as an heir of a living parent, is not property and cannot even be considered as an economic circumstance. In re Marriage of Smith (2024 COA 95) read that provision functionally: a trust that was irrevocable on paper still produced a "revocable" interest because the father held a power of appointment that could cut the daughter out entirely.
The Records That Prove the Claim
Separate-property claims are won on paper. The inheriting spouse should be able to produce, years later:
- The will, trust instrument, or probate inventory showing what was left and to whom.
- The estate or trust account statement showing the distribution, and the receiving account statement showing the same funds arriving.
- Statements for the receiving account from the month of receipt forward, without gaps. The value on the day of receipt is the number the court will subtract from the current value.
- For real estate, the deed from the estate and an appraisal or assessor value as of the date of transfer.
- For lifetime gifts, the donor's gift tax return. In an unpublished 2014 decision, In re Marriage of Milias, the court fixed the separate value of a trust interest from the grantor's gift tax return.
- A record of every dollar that left the account and where it went.
The single most effective practice is also the simplest: open a new account in your name alone before the money arrives, and never deposit a paycheck into it.
Prenups, Postnups, and What Parents Can Do
Subsection (2)(d) makes property "excluded by valid agreement of the parties" separate. A premarital or marital agreement under the Colorado Uniform Premarital and Marital Agreements Act can define an expected inheritance, its appreciation, and its income as separate regardless of where it is deposited or what it buys, and can waive the gift presumption in advance. The agreement must be in a signed record; under In re Marriage of Zander (2021), an oral understanding is unenforceable. A postnuptial agreement signed when the inheritance arrives, with disclosure and access to counsel for both spouses under C.R.S. § 14-2-309, is the tool for couples who never signed a prenup. The blog covers postnups in their own article.
Parents planning an estate have their own levers, and they are often stronger than anything the child can do later. Leaving money in a discretionary trust with an independent trustee, rather than outright, keeps the interest from being property in the child's divorce under Jones. Keeping the trust amendable during the parent's lifetime, or reserving a power of appointment, takes it out of the analysis entirely under subsection (7)(b). And parents should resist the generous instinct to pay the couple's mortgage directly: in Krejci, a mother's payments on the couple's mortgage were presumed to be gifts to the marriage, not to her daughter. Those choices belong in an estate plan drawn with a divorce lawyer's input, not just an estate planner's.
Talk to a Denver Divorce Attorney About Protecting an Inheritance
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. An inheritance is easiest to protect in the month it arrives and hardest to protect in the month a petition is filed, so the conversation about accounts, titles, and agreements should happen early. A first meeting is a paid consultation, not a free call and not a sales pitch.
Read the full guide on DenverDivorce.com: Separate Property in Colorado.
Educational information only, not legal advice. Reading this article does not create an attorney-client relationship.
