(14) Community Property: Reimbursements

Question 1

Rule & what the reimbusement includes?

Reimbursements of Acquisition of Property

Answer 1

Under the Anti-Lucas statute any separate property used to acquire jointly titled property is entitled to reimbursement (reimbursement is the fair market value at the time of purchase).

The reimbursement includes (1) down payments; (2) payments for improvements; and (3) principal payments (but not mortgage interest, taxes, insurance or maintenance payments).

Question 2

Community Property to improve Other Spouses Separate Property

Reimbursements for Improvements

Answer 2

When community property is used to improve the other spouses separate property there is a split in authority. Traditionally it is presumed a gift but this presumption may be rebutted by an agreement to reimburse. Some courts have held that community property is entitled to reimbursement (even without an agreement to reimburse).

Question 3

Community Property to improve own Separate Property

Reimbursements for Improvements

Answer 3

When community property is used to improve a spouse’s own separate property, the community is entitled to reimbursement for either the cost of improvement or the increase in value of separate property.

Question 4

Separate Property to improve Community Property

Reimbursements for Improvements

Answer 4

When separate property is used to improve community property the spouse is entitled to reimbursement for either the cost of improvement or the increase in value.

Question 5

Separate Property to improve other Spouses Separate Property

Reimbursements for Improvements

Answer 5

When separate property is used to improve the other spouses separate property the spouse is entitled to reimbursement for the amount of contribution made.

Question 6

When is reimbursement required?

Professional Degrees/Education Expenses

Answer 6

Professional degrees acquired during marriage are separate property of the acquiring spouse. However the community is entitled to reimbursement when (1) community property funds are used to pay educational expenses (including loans, textbooks, etc. but not housing costs); AND (2) the education enhanced the spouses earning capacity.

Question 7

When is reimbursement not required?

Professional Degrees/Education Expenses

Answer 7

Reimbursement is not required where: (a) the community has substantially benefited from the education (it is presumed a benefit occurred after 10 years); (b) the other spouse received community funded education too; or (c) the education lessens the need for spousal support.

Question 8

Child Support/Alimony Payments

Answer 8

Community property was used to make payments, and separate property was available, the community is entitled to a reimbursement upon divorce.
* Community property should not be used to make child support payments from a prior marriage unless separate property is not available.

Question 9

Medical Expenses

Answer 9

A spouse is entitled to reimbursement when they expend separate property for medical expenses of the other spouse if (a) community property was available or (b) if the debtor spouse had available separate property.

Question 10

Separate Property Loan

Answer 10

The community is entitled to a pro-rata ownership share of the property for amounts that reduced the principal debt on the asset when payments are made with community property to pay loans for separate property. The pro-rata share doesn’t include payments of mortgage interest, taxes and insurance.
*Upon divorce the community is entitled to reimbursement of its pro-rata share of the separate property.