Contribution of One Estate to Another

Question 1

Contribution of SP to CP asset

Answer 1

Reimbursement Rule. As of 1985, at divorce, SP contributor may seek reimbursement w/out interest for SP contributions to CP, including down payment, SP improvements, or SP principal payments on the mortgage. Flat reimbursement is better than nothing, but not very attractive, so the couple can instead execute an Aufmuth agreement providing that the SP contribution is entitled to a pro rata share in the increased equity of the CP asset.

Options = gift; reimbursement; or proportionate share.

Question 2

Contribution of CP to SP asset. Community develops a pro rate interest or share in the CP.

Answer 2

Pro Rata Rule: The community acquires a pro rata interest in the SP asset measured by the percentage of principal debt reduction attributable to the expenditure of community funds.

Basic formula: CP = principal debt reduction attributable to CP divided by purchase price. The balance is SP.

Moore (CP contribution to principal debt (excluding interest, taxes, or insurance) builds a proportionate share in SP).

Marsden allows credit to SP owner for pre-marital appreciation.

Frick calculates ratio of capital contribution of SP and CP to purchase price.

Question 3

Contribution of SP to spouse’s SP

Answer 3

In CA, reimbursement without interest or appreciation for acquisition of property; expenditures for improvements are not as clear (could be gift)