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 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 any 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 as much as a 100% penalty for breaching a fiduciary duty.

Watts Charge

Under certain circumstances, a party may be charged for the use of real property, 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.

Pereira / Van Camp

The community may be reimbursed relative to a portion of the increase in value during the marriage of a separate property business.

Family Law Infographic - Separate Money Used 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

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

Family Law Infographic - Community Money Used After Date of Separation

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

Family Law Infographic - Separate Money Used After Date of Judgement