San Jose Family Law Attorney Discusses Epstein Credits
Given that it takes a minimum of six months and one day to obtain a divorce in California, it is common for one spouse to continue paying community debts while the divorce is pending. When a party uses his or her separate property for community purposes after separation, that party, as a general matter is entitled to reimbursement. These reimbursements are commonly known as Epstein credits, so named after the Marriage of Epstein (1979) 24 Cal. 3d. 76, 84. Circumstances under which reimbursement is appropriate is the subject of case law. The Court has found, for example, that if one party used their separate property funds to make mortgage payments on a community residence, the paying party would be entitled to reimbursement. The Court has also found, for example, that the value of a spouse’s post separation services necessary to complete performance owed by the community under a contract made during marriage is subject to reimbursement. Using the authority of Epstein, and in appropriate circumstances, the Court has also ordered reimbursement to the community when one party unilaterally uses community property to pay for his or her separate obligations, after separation.
It is important to note that reimbursements are discretionary and the Epstein Court did specifically indicate that it would be unreasonable to expect reimbursement under certain circumstances such as: (1) when there is an agreement between the parties that payment would not be reimbursed, (2) when the paying party truly intended the payment to constitute a gift to the community, (3) when the payment was made on a debt for the acquisition or preservation of an asset the paying party was using, and the amount paid was not substantially in excess of the value of the use, (4) or when the payment constituted a discharge of the paying party’s spousal support or child support duty.
The team of attorneys at Sagaria Law, P.C. deals with all aspects of family law and can assist you through any stage of your divorce, custody, or support litigation. We serve clients through the bay area and have offices Santa Clara, Alameda, and Monterey Counties. Contact our office today to set up a free consultation with one of our attorneys.