When are Reimbursements Ordered by a San Diego Superior Court Judge in a Legal Separation or Divorce in 2014 for Payment of Community Property Obligations After Date of Separation?

In San Diego, for legal separation and divorce cases, many spouses use their separate property from before their date of marriage for pay community property funds during marriage. For example, a house in San Diego which is owned by both spouses may be paid by one spouse with their separate property funds. In the event of a divorce, is the spouse who used their separate property to pay this community property obligation able to ask for and receive a reimbursement? The famous case on this subject of reimbursement for obligations after separation with separate property funds for community property expenses is a called is Epstein. This case recognized the benefit to encourage both husband and wife to pay community property obligations after separation in order to minimize the impact for the wife and husband’s credit rating. Before this case, which was in 1979 so not new in that sense, the rule was that if one spouse used their separate property for community property purposes without an agreement, then no reimbursement would be granted as a gift was intended. Epstein analysis was different and, that after the date of separation, the rationale for presuming a gift was eliminated. The rule now, when a husband or wife uses their separate property, either from earnings or otherwise, to satisfy community property obligations, is that reimbursement would be permitted in the community property division at the end of the case. There are, or course, exceptions to the rule, and reimbursement is not permitted in the following circumstances:

(1) The circumstances under which the payment was made would be unreasonable to expect reimbursement;
(2) The parties entered into an agreement that there would not be reimbursement;
(3) The evidence is that the spouse who paid truly intended the payment to be a gift [such as a birthday or anniversary present];
(4) The payment was made on a debt which is related to an asset the spouse who is paying the debt is using, and the amount of the payment is not substantially in excess of the value of the asset's use;
(5) If the payment was in the nature of support of a dependent child of the parties or a spouse; or
(6) When spousal support as a temporary order was for court-ordered payment of obligations.

The time to that the San Diego Judges decide what reimbursement will be allowed {if any} should be at the temporary support stage, rather than during final settlement or trial, when another substantial issue is added and must be resolved.

To assign Epstein credits in the proper method in the division of property is as follows: reduce the amount of community property charged to the spouse who paid the obligation by the by full amount of credit before the equalizing payment is calculated. This results in the spouse who made the payments receiving a 50% credit since the reimbursement comes from the community property. This is only a summary and not a complete recitation of the law.

In these family law cases for reimbursement, the burden of proof is on the party claiming the credit. It is important to present your evidence which can consist of a tracing of the payments and, if complicated and necessary, a forensic CPA can assist. If you are asking for a reimbursement, and do not meet the burden of proof required, your request will be denied.

The law office of Doppelt and Forney, APLC can analyze your reimbursement claim under California law and let you know if you should pursue this claim or not. The law firm is in San Diego and offers a complimentary consultation. Please feel free to call and set your consultation up today.