Reimbursing Contributions of Separate Property
Is everything purchased during marriage split 50/50 at the time of division of property?
No. While the presumption exists that property acquired during marriage is community property, there are exceptions to this rule. One exception is a case where a party uses his or her “separate property” to contribute towards the acquisition of property during marriage. Pursuant to Family Code §2640, unless there has been a written waiver of reimbursement, the party contributing separate property shall be reimbursed for the party’s contributions to the acquisition of property of the community property estate to the extent the party traces the contributions to a separate property source. The amount reimbursed shall be without interest or adjustment for change in monetary values and may not exceed the net value of the property at the time of the division.
What is separate property?
In addition to property acquired after the date of separation, separate property is : (1) All property owned by the person before marriage; or (2) All property acquired by the person after marriage by gift, bequest, devise, or descent or (3) The rents, issues, and profits of the property described in this section. Family Code§ 770.
What qualifies as “contributions to the acquisition of property of the community estate”?
If your separate property is used to (a) make a down payment on a residence or (b) pay for any improvements on a residence or (c) make payments that reduce the principal of a loan used to finance the purchase or improvement of the property but do not include payments of interest on the loan or payments made for maintenance, insurance, or taxation of the property, you may seek reimbursement for your contribution of separate property from the family court. Family Code §2640(a).
How do I prove that I contributed my separate property to the acquisition of community property?
If the parties disagree over a “2640 claim”, the court will likely require the party requesting reimbursement to trace the contribution of funds to a separate property source, such as a bank account which contains the separate property funds. Tracing becomes more complicated when the parties “commingle” their bank accounts with both community and separate property funds. The mere commingling of separate property moneys in a community bank account does not destroy the separate property character of the funds, so long as they can be adequately traced. When the funds were used to acquire the community asset come from a commingled account, the spouse seeking reimbursement can trace either through a direct tracing showing that all community funds in the account had been exhausted and that only separate funds remained. Regardless of the method used, the court will require the party seeking reimbursement to maintain adequate records to substantiate the tracing.
WILKINSON & FINKBEINER, FAMILY LAW ATTORNEYS
At Wilkinson & Finkbeiner, we specialize in all areas of property division, including reimbursements due to a party’s separate property. Our goal is to provide high quality expert legal representation to all our clients who are dealing with property issues. If the issues involved in your dissolution case involve division of marital assets and you want our attorneys to represent your interests, we will fight for your right to receive credit for separate property that you contributed to the community estate during the marriage. For a free case evaluation, contact our Orange County property division lawyers today.