Reimbursement Claims

Family Law Articles

Reimbursement claims arise when one of the marital estates confers a benefit on the property of another marital estate and it would be unjust for the benefited estate to reimburse the conferring estate.  Reimbursement claims arise because marital estates overlap or co-mingle during a marriage.  Reimbursement claims can arise when the community estate pays for the debts or obligations of one of the spouse’s separate debts or when one of the spouse’s separate property pays the debts of the other spouse’s separate estate.  These are most often debts that were acquired before marriage but paid for during marriage with community property or separate property of the other spouse.  Reimbursement claims also occur when separate property is comingled with community property. 

Consider these common scenarios:

  1. When the parties Angela and Sam married, Angela had a house she previously purchased that still had a mortgage on it.  While the house is Angela’s separate property because the title to the house vested when Angela purchased it before the marriage, it is often overlooked that the debt is Angela’s separate property too.  Even though Angela continued to pay the mortgage payment each month from her paycheck, like she always had, Angela’s paycheck during marriage is now community property.  This resulted in Angela paying her separate property debt with community property (her paycheck).  Frequently, this reimbursement claim is overlooked.  Reimbursement is the process by which the community estate can be reimbursed for the community money that Angela used to pay off her separate property house.  It takes experience to identify and prove these claims or to defend against these claims when made by the other party.  An experienced divorce attorney knows what evidence is needed to prove or disprove these claims.
  2. Mary and Robert find their dream home two months before the wedding, and because Robert has better credit than Mary, they decide to have Robert purchase the home.  Because the title vested prior to the marriage, both the house and the mortgage are Robert’s separate estate.  However, during the marriage the mortgage was paid from community property when the payment was made from Robert’s paycheck.  The Court CANNOT award Mary the house, or a portion of the equity from the house, because it is Robert’s separate property.  While this seems wholly unfair, the law provides a right of reimbursement for the community property that was spent on Robert’s separate property, but only if the reimbursement claim is made and supported properly by evidence. 
  3. During the marriage Scott’s aunt died and left Scott $50,000.  Scott deposits the money into the joint checking account which is used by the couple for all their banking.  Scott and Sarah’s paychecks are routinely deposited into the account, and all of their bills are routinely paid from the account.  Five years after receiving the inheritance, Scott and Sarah make a $30,000 downpayment on a house.  During the divorce Scott claims that he should be awarded his separate property inheritance of $50,000 by giving him $20,000 of the checking account balance and giving him $30,000 more of the proceeds from the house when it is sold.  Whether Scott will be entitled to any part of his inheritance will depend on whether he can trace the money sufficiently to prove his separate property claim.  Usually, this requires hiring a financial expert to go back and trace the money in and out of the account.

Reimbursement claims often are overlooked if an experienced divorce attorney is not hired.  Reimbursement claims can make a real difference in your postdivorce financial situation.  Call Robin R. Zegen today for a consultation and to partner with an experienced divorce lawyer who will make sure you are in the best financial position postdivorce.