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Can there be reimbursement in property division during divorce?

On Behalf of | May 12, 2022 | Community Property Division

California couples who are in the middle of a divorce – especially a high-asset divorce – will be concerned about financial issues. That unavoidably includes the division of property. While the law has certain basics when it comes to property, it can still be made difficult if there is disagreement over various factors.

For example, if one spouse contributed to the acquisition of the property or there were contributions to the other spouse being educated or trained to advance and accrue property, the proceeds could be in dispute. Understanding reimbursements as part of property division is a key part of a case.

Reimbursements for property acquisition and education or training

If a couple acquired a property such as real estate and there was a contribution to it in any way by the nonowning spouse, reimbursement could be made to the one who will not retain the property in the divorce. For community property, the one who contributed but is not keeping it can ask for reimbursement except in situations where they signed a waiver nullifying it.

There will be no interest or adjustment that goes beyond the property’s net value when it is divided and reimbursement is paid. There will also be reimbursement for separate property unless there is a written waiver.

Regarding education or training, if there were payments made with community property or quasi-community property, there can be reimbursement for that too. There will be reimbursement if the person who received the education and training benefited substantially from it.

If, for example, a person went to business school and advanced at work or started their own business, there will be reimbursement with interest to the other spouse. If there were loans during the marriage to pay for it, it will not be a liability for the spouse who did not benefit from the education. This can vary depending on how much the person who did not get the education or training benefited from the community’s lifestyle improvement.

Understanding reimbursements in property division can be complicated

Not all family law cases are acrimonious. Many situations can be settled reasonably through negotiation without a long, drawn-out battle. Others, however, can be contentious. With cases in which reimbursement is needed to settle property division, it is wise to try and forge a workable solution.

If that is not possible, then the property value will need to be assessed, its acquisition scrutinized and how to divide it determined. Regardless of the circumstances, being prepared is vital and qualified advice can help with being protected and reaching an acceptable outcome.