A big part of the divorce process involves determining each parties’ right to be reimbursed for various expenditures made either during their marriage or after the parties separated. In fact, the reimbursement claims made by the parties are often the most litigated issues of a divorce, and given the numerous reimbursement rights afforded by law, identifying reimbursement claims worth pursuing can require a very complicated analysis. However, with a basic understanding of this topic, the decision as to how much time and money to spend litigating reimbursement claims becomes a little easier.
The first thing to understand is there are far more expenditures made by spouses that are not reimbursable under the law than those that are. For example, in most cases, when a spouse spends foolishly during the marriage, there are no rights to reimbursement.
It is also very important to distinguish those reimbursement claims that are automatic by law from those where the judge has discretion in granting. Likewise, it is important to distinguish reimbursement claims derived from a spouses' separate property expenditures as from his or her community expenditures. Finally, and most importantly, it is important to pursue reimbursement claims only when you can prove your claim and when it makes financial sense to do so.
Now let's take a look at a five common reimbursement claims afforded under California family law and a few sensible tips to consider before litigating this issue.
- A spouse has the right to be reimbursed for the use of his or her separate funds as a down payment toward the purchase of a house, or money spent on improvements to the family residence that increases the value of the home.
- Conversely, the trial court may order reimbursement to the community when a party unilaterally uses community property to pay his or her separate obligations. For example, the community estate is entitled to reimbursement for any community funds used to pay down the separate property debt of a spouse.
- The expenditure of community funds toward a spouse’s child and spousal support obligations from a different relationship is also reimbursable, so long as the spouse with the obligation had the ability to make the payments with his or her separate property income or assets.
- In appropriate cases, the community may be entitled to reimbursement for the reasonable value of a party's exclusive use of community property after separation.
- Finally, when a party uses his or her separate property for community purposes after separation, the party is, as a general rule, entitled to reimbursements. This would include situations where a spouse makes mortgage payments on a family residence that he or she is not occupying.
In order to maximize your financial situation during a divorce, it would be wise to pay special attention to what you are paying for post separation. As mentioned above, not all expenditures are reimbursable. However, if you have a reimbursement claim worth pursuing, be sure to hold onto those canceled checks and other documents needed to prove your case. If you have a reimbursement claim against your spouse, you have the burden of proof concerning the expenditures that were made. Meeting your burden may or may not be possible depending on the amount of documentation you have to trace the transaction.
Finally, as previously mentioned, be sure to choose your reimbursement claims carefully. Before pressing your reimbursement claim make sure it makes financial sense to do so. Most people would agree that it does not make sense to spend $10,000 on attorney's fees to litigate a $5,000 claim. Putting aside your emotions and deciding this issue as a “business decision” will help steer you to the right decision.