D.Z. (Wife) and J.Z. (Husband) married in 2001. At the time of their marriage, Wife and Husband each had separate retirement accounts. They also each received separate inheritances during their marriage.
Wife filed for divorce in 2016, and the district court entered orders dissolving Wife and Husband’s marriage in 2018.
When it came time to identify the parties’ property as either separate or marital and equitably divide and distribute the marital property, Wife claimed that her and Husband’s separate retirement accounts and inheritances–including the increase in value of those assets during their marriage–were their separate property not subject to equitable division and distribution in their divorce because of an oral agreement she and Husband had made.
In support of her claim, Wife relied on a 2007 amendment to a revocable living trust Wife and Husband had created as part of their estate plan, which “explicitly removed the retirement accounts from the trust” as a result of their oral agreement. Furthermore, according to Wife, her and Husband’s separate inheritances were not mentioned in the amendment because the inheritances were never included in the trust.
Wife also introduced as evidence in the permanent orders hearing an email Husband sent in 2014 to his son from a previous marriage. In that email, Husband wrote that his son and daughter were “50/50 beneficiaries” of Husband’s retirement account. Wife believed that the email “corroborated the oral agreement because it suggested that she had no ownership interest in Husband’s retirement account.”
Husband, however, denied that he and Wife had entered into the oral agreement. He further argued “in the alternative” to the district court that even if an oral agreement had existed, it would have been invalid because it was not in writing or signed.
District Court Permanent Orders
The district court agreed with Wife. Based on the 2007 amendment to the trust and Husband’s 2014 email to his son, the court ruled that “Wife had established the existence of an oral agreement to exclude the parties’ retirement accounts and inheritances from the marital estate” and that Wife and Husband’s agreement did not have to be in writing and signed in order to be valid.
The district court also held that the oral agreement was enforceable because Wife and Husband had partially performed the agreement by keeping “their [retirement] accounts/pensions and their inheritances…out of their estate planning trust.” Furthermore, according to the court, Husband’s 2014 email to his son demonstrated that Husband had “acted in accordance with the parties’ agreement.”
Colorado Court of Appeals Review
Husband appealed the district court’s decision to the Colorado Court of Appeals, which reversed the district court’s ruling, concluding that “an agreement between spouses to exclude property from the marital estate must be in writing and signed by both parties.” The court of appeals was also “unmoved” by the district court’s “partial performance” finding as an “exception to the writing and signature requirements.”
Colorado Supreme Court Decision
Dissatisfied with the Colorado Court of Appeals’ judgment, Wife filed a petition with the Colorado Supreme Court asking it to review the case, which the supreme court agreed to do.
The supreme court began by focusing on the presumption of marital property found in Colorado’s Uniform Dissolution of Marriage Act (UDMA), which is that “all property acquired by either spouse subsequent to the marriage and prior to a decree of legal separation” is presumed to be marital property subject to equitable distribution in a Colorado divorce case. See C.R.S. § 14-10-113(1). The court further discussed that property can be excluded from the “[d]isposition of property” in a divorce case if the property is “excluded by valid agreement of the parties,” which is one of the four exclusions for marital property specifically stated in the UDMA. See C.R.S. § 14-10-113(2)(d).
But the term valid agreement is not defined in Colorado’s divorce statute, so given the lack of a statutory definition, the Colorado Supreme Court had to resort to the term’s “ordinary and natural meaning.” To accomplish this, the court looked to the Merriam-Webster Online Dictionary, which defined valid as “having legal efficacy or force, especially: executed with the proper legal authority and formalities,” such as “a valid contract.” The court also reviewed Black’s Law Dictionary (11th ed. 2019)–a well-known legal dictionary–which defined the term “Valid” as meaning “[l]egally sufficient.”
The Colorado Supreme Court stated that even though the district court correctly viewed the term “valid,” it erred when it “turned to basic contract principles to determine whether the parties’ oral agreement was effective and enforceable under the law.” Instead, the district court should have relied on the Colorado Marital Agreement Act, which was in effect in 2007 at the time Husband and Wife purportedly entered into their oral agreement.
The Colorado Marital Agreement Act (CMAA)–which was replaced on July 1, 2014, by Colorado’s Uniform Premarital and Marital Agreements Act–set forth the required legal formalities for a marital agreement in 2007. In particular, the CMAA defined a “marital agreement” as “an agreement…between present spouses, but only if signed by both parties prior to the filing of an action for dissolution of marriage or for legal separation.”
Importantly, under the CMAA in effect at the time, a marital agreement was required to “be in writing and signed by both parties,” and a marital agreement executed during a marriage became effective “upon the signatures of both parties.” Moreover, when a martial agreement became effective, it could only be amended or revoked “by a written agreement signed by both parties.” Therefore, the Colorado Supreme Court concluded that
“in 2007, when the [Colorado Marital Agreement Act] was in effect, Colorado law required that marital agreements be in writing and signed by both spouses” in order to considered a “valid agreement” that could exclude property from the marital estate upon divorce.
See In re Marriage of Zander, 2021 CO 12, ¶ 19
The Colorado Supreme Court’s conclusion would likely be the same even if Husband and Wife’s oral agreement had been made after July 1, 2014, when Colorado’s Uniform Premarital and Marital Agreements Act became effective. Like the Colorado Marital Agreement Act, Colorado’s Uniform Premarital and Marital Agreements Act (UPMAA) states that “[a] premarital agreement or marital agreement must be in a record and signed by both parties.” C.R.S. § 14-2-306. The UPMAA also states that “[a] marital agreement is effective on signing by both parties.” C.R.S. § 14-2-307.
The Colorado Supreme Court also disagreed with the district court’s “reliance on the partial performance doctrine as an exception to the writing and signature requirements” of a valid marital agreement. The supreme court noted that while partial performance may allow some oral agreements to be enforceable under Colorado contract law, “that is no basis to import an exception into the [Colorado Marital Agreement Act].” Instead, if Colorado’s legislature wanted to create a partial performance exception in the Colorado Marital Agreement Act or Colorado’s Uniform Premarital and Marital Agreements Act, it would have said so. Therefore, “regardless of whether there was partial performance by the parties here, the [parties’ 2007 oral agreement] cannot be enforced because it was neither in writing nor signed by both parties.” In re Marriage of Zander, 2021 CO 12, ¶ 21.
- An agreement between spouses to exclude property from the marital estate must be in writing and signed by both spouses.
- Any agreement between spouses that is neither in writing nor signed by both spouses is not valid or enforceable when the spouses divorce and try to set aside their separate property and divide and distribute their marital property as part of their divorce case.
- It does not matter whether the spouses’ actions after entering into an oral agreement demonstrated their intent to form a marital agreement, because partial performance of an oral agreement cannot satisfy the writing and signature requirements of the Colorado Marital Agreement Act and Colorado’s Uniform Premarital and Marital Agreements Act.