A Divorce Lawyers Overview of Reimbursement Claims
Reimbursement claims arise when a party pays off various debts with community or separate property. There are several different types of reimbursement claims available to a spouse who pays off various debts with community or separate property. A Lawyer, experienced with reimbursement claims will solidify your case and ensure you have the best possible outcome.
Family Code section 900 Reimbursement Claims
As we said before, if your spouse used community money to pay their own debt, and that didn't benefit you, you may have a claim for reimbursement from them. Also, if one spouse’s separate property is used to pay off debts incurred by the other spouse for that spouse’s “necessities of life” (food, clothing, shelter, etc.) while they are living together, the non-debtor spouse, however, will have a right to be reimbursed to the extent that the debtor spouse had separate or community property available but not used at the time the debt was incurred.
Reimbursement for Community Funds Used Toward a Spouse’s Education or Training.
Although the community does not acquire a community property interest in a spouse’s education or training. Nevertheless, if it can be shown that one spouse worked so that the other could attend school or pursue training for a new career or to enhance their earning capacity, the community has a right to be reimbursed for those contributions. This is so even if the education or training occurred before marriage. The spouse claiming reimbursement has the burden to trace the use of community funds to pay for the other spouse’s education or training. Also, any loan incurred by a spouse for education or training will be assigned to that spouse during a property division and cannot be considered in determining an equal division of community property and debt.
Reimbursement for Separate Property Used to Pay for Community Debts Or Contribute Toward Community Property.
If the payment was made during marriage and not after separation, then it will be presumed that this was a gift and the contributing party will not have a right to reimbursement. If, however, the separate property contribution was made after separation and before trial, it is no longer presumed to be a gift to the community and in that case the court has discretion to reimburse the contributing party out of community assets. Such reimbursements are called Epstein credits, based on the California Supreme Court case Marriage of Epstein (1979) 24 Cal.3d 76.
What if the paying spouse, however, has exclusive use of the asset being paid off, e.g., the car or house on which the spouse is making payments? The Epstein court held that where the paying spouse also uses the asset and the “amount paid was not substantially in excess of the value of the use,” it might not be equitable to permit a reimbursement claim.
Two other exception to the Epstein rule are: (1) the parties have an agreement that separate property used to pay off community debts will not be reimbursed; and (2) the payments are intended as a gift or are in lieu of child or spousal support.
As you can see, issues of property division of marital assets and assignment of marital debts and reimbursement claims raise complex issues that may go unnoticed or may be resolved incorrectly without an experienced and aggressive property division lawyer. Contact our law office for a consultation to help you protect your community property rights and get your fair share in any property division settlement or trial.
Reimbursements for Separate Property Used to Acquire Community Property
Family Code section 2640 provides that where a party uses his or her separate property to acquire community property, e.g., using separate property as a down payment on a home acquired during marriage, the paying spouse has a statutory right of reimbursement, so long as that party can trace the use of separate property to acquire community assets, and so long as that right has not been waived in writing.
Reimbursement for Reasonable Value of Use of Community Asset after Separation
What possible reimbursement claims arise when, after separation, one spouse moves out of the family home and continues making the mortgage payments, while the other spouse lives in the home? As stated above, the paying spouse might have Epstein reimbursement claims for using separate property to pay off the community asset, i.e., the home. In addition, the case of In re Marriage of Watts (1985) 171 Cal.App.3d 366, states that, where one spouse has exclusive use of community assets between the date of separation and trial, that spouse may be required to reimburse the community for the reasonable value of the use of that asset. In the above case, if the fair rental value of the home exceeds the amount of the payments the other spouse is paying to maintain the home, the non-paying spouse may be required to reimburse the community the amount of the fair rental value of that home that exceeds the monthly mortgage and related payments.
As you can see, reimbursement claims can be complicated and failing to recognize them can result in a party not receiving an equitable property division. Contact our lawyers who can advise you on what, if any reimbursement claims you may have in your case.
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