Reimbursements – Equitable Apportionment (Part 2)

 

In an ideal divorce, each spouse would shake hands, say “I wish you well,” take their share of community property, and live happily ever after. While possible, the vast majority of divorces are much less cordial, and more complicated. One level of complication is the issue of reimbursement.

Part 1 of this Reimbursement series of our Family Law 101 blog discussed Epstein credits and Watts charges. [Part 1]. Here, I will discuss two more common scenarios raised by our clients.

Background

Generally, all income received and debt incurred during marriage belongs to the community (both husband and wife). Also, the income received after date of separation belongs to the income earner alone.

Client Scenario 3

After date of separation, my spouse used community property income to improve his separate property home. The improvements increased the value of my spouse’s home. Can I get my share of the community property back?

The situation refers to what is known as equitable apportionment. Depending on the circumstances, you have the opportunity to recover your community share of income used and an interest in the enhanced value of the property. Your claim for reimbursement will require knowledge of equity appreciation at different times, whether the improvement actually increased the value of your spouse’s separate property, and calculating the community share in a complex formula. Therefore, an expert must be hired to obtain this information to support your claim. We recommend consulting your attorney to discuss the best approach to resolving this situation. [Disclaimer]

Client Scenario 4

My spouse purchased a home before we met and well before we got married. During marriage, our community income was used to pay down the mortgage. Now I don’t have my own home and my spouse gets the benefit of a lower mortgage. Is there anything I can do?

This also is an equitable apportionment scenario, although very different in nature. In this scenario, both spouses agreed to put their community property income toward the mortgage of the home. The question becomes, what portion of the home is now community property as a result of community income contribution. The calculation requires several pieces of information including, but not limited to, the fair market value of the home at time of marriage and at date of calculation, and the amount of the mortgage paid prior to marriage and the amount paid with community property. Here too, an expert must be hired to obtain this information to support your claim. Again, consulting with your attorney on this subject is highly recommended. [Insert link to Disclaimer page]

Our family law team at Naimish & Lewis can advise you on this and other dissolution and divorce related matters involving community property. To schedule an initial consultation with an attorney at our firm, please contact us.