Charges, Credits, and Rights to Reimbursement

Reimbursements in California divorces are determined by specific statutes and case law. Reimbursements are not granted based upon a sense of fairness. Fairness alone is not the determining factor, although fairness is inherent in the development of many cases and statutes. If a right to reimbursement is not provided for in a statute or in a case, it cannot be granted by the family law courts.

There are a number of exceptions, nuances, and gray areas in this area of the law. Reimbursements and credits may require determining:

  • When the money was spent
  • Who spent the money
  • For what was the money used
  • Whether the asset acquired still exists
  • Whether any money spent on an asset caused the asset’s value to increase
  • Whether the money spent was community or separate
  • Whether the expenditure was a misappropriation or a breach of fiduciary duty
  • Whether an asset was used by one party after separation
  • What was the value of the use

Epstein* Credits

A spouse may receive credit for using separate property funds to pay community debts post-date of separation unless payment was:

  • A gift
  • In lieu of support
  • There was an agreement to the contrary
  • Paying spouse was using the underlying asset

Misappropriation

A party may be charged relative to misappropriation of community funds.

Fiduciary Duty

A party may be charged a penalty for breaching a fiduciary duty. This penalty may equal 100% of the value of the non-disclosed asset.

Watts* Charge

Under certain circumstances, a party may be charged for the use of real property, other tangible assets, liquid funds, a business or any other asset after the date of separation.

House

Bank

Business

Boat

Family Law Code Section 2640

A spouse may receive reimbursement for separate property contributions to a jointly titled asset. As an example, a party is reimbursed the value of the equity that existed in a home on the date he/she placed the other party's name on title unless there was a written waiver of that right.

Pereira* / Van Camp*

The community may be reimbursed relative to a portion of the increase in value of a separate property business during the marriage of a separate property business. This is a right to reimbursement and not a right to ownership.

*Based on California family law cases

During Marriage

Infographic - During Marriage

Credits, charges and reimbursements may need to be analyzed in the following sample of circumstances:

A credit may exist where, during marriage, a spouse uses his/her own separate money to:

  • Fund the purchase of a new "separate" asset
  • Improve/acquire community asset
  • Pay community debt
  • Improve separate property of other spouse
  • Fund a community project or purpose
  • Make loan to other spouse
  • Purchase asset in name of other spouse

A reimbursement may exist where, during marriage, separate money of one spouse was used by the other spouse to:

  • Improve/maintain his/her own separate asset
  • Pay his/her own separate debt
  • Pay community debt

A reimbursement may exist where, during marriage, community money is used to:

  • Pay child or spousal support relative to another relationship
  • Pay taxes or separate debt of one spouse
  • Acquire asset in the name of one spouse
  • Pay for education/training of one spouse
  • Pay mortgage payments on asset of either spouse
  • Improve separate property of either spouse
  • Pay expenses of the separate property of either spouse

After Date of Separation

Infographic - After Date of Separation

A credit may exist where, after date of separation, a spouse uses his/her own separate money to:

  • Pay community debts
  • Improve community property asset

A charge may exist where, after date of separation, one spouse uses community money to:

  • Pay for his/her own separate debts
  • Pay community expenses on an asset that the spouse is using

After Judgment Entered

Infographic - After Judgment Entered

A credit may exist where, after date of judgment, a spouse uses separate money to:

  • Pay debt assigned to other spouse
  • Pay separate debt of other spouse