When Can a Spouse Be Reimbursed For Contributions to Community Assets?

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Video Transcript

This next edition of our web dialogue on family law deals with a quite interesting part of the law relating to property division. This is a section of the law that a lot of clients have questions about which I think is really helpful. It deals with Family Code Section §2640. It is the right that spouses have to be reimbursed for separate property contributions to the acquisition of community property assets.

Where this comes up frequently is when a spouse brings money into the marriage and typically it is used to buy a house, or maybe a house was owned by one of the parties before marriage and it is sold during the marriage in order to buy the next house. The first house being separate property, an asset that was owned before marriage; the second house being community property, an asset purchased during marriage. What the law provides is that separate property that was brought into the marriage to acquire that community property asset is reimbursed to the separatizing spouse (separatizer: the spouse asserting a separate property claim) upon dissolution. To put some numbers on it, let’s say a party owned a home when they were married. During the marriage, the home was sold and $100,000 of equity was taken out of that house to purchase the community property house (the first marital home). Upon dissolution when that house is sold, the spouse who brought that separate property into the marriage gets it back. That spouse gets the money back without interest or appreciation, but they do get the money back. This is the legislature’s premarital agreement for everybody. It’s something that shouldn’t be overlooked and can apply to assets other than just the house. The houses are easy to spot §2640 reimbursements, but the same applies to other assets. For example, bank accounts, stock accounts, if there is separate property; that is, property that was acquired before marriage or a property that was acquired during marriage by gift or inheritance. That is separate property and to the extent it can be traced into community property and it is reimbursed to the contributing spouse upon divorce. I strongly recommend that you come on in and talk to us about potential reimbursements of separate property from the community that we can help you locate, trace, identify and return to you.

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