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Do reimbursement claims eliminate the need for a prenup?

| Dec 18, 2020 | Divorce |

It sometimes makes sense for married couples to keep their assets separate, particularly if they are remarrying. However, some may feel that outlining this in a prenup sends the wrong message or sets the wrong tone for the marriage, perhaps making it seem closer to a business merger than an actual marriage based on love.

Those once again in love but concerned about their assets need to remember a few things. As with their previous marriage, and unless there is a prenup to define the division of assets, assets here in Texas are divided into community property (shared between the couple) during the marriage and separate property that was accumulated before the wedding or through gifts or inheritance. So, if the second marriage does not work out, assets brought into the union would likely stay with the spouse because they are separate property.

But there will likely still be some community assets accrued over their years together because both spouses owned, shared and used certain new assets. These would be divided based on what is “just and right.” There may be other assets that do not easily fall into the buckets of community or separate. When this happens, one or both spouses may wish to consider reimbursement claims.

What is a reimbursement claim?

It can be difficult keeping a married couple’s assets from becoming intertwined, so reimbursement claim can help untangle a financial knot in the spirit of dividing assets fairly. Here are some examples of when filing a reimbursement claim makes sense:

  • Spouses used community funds to pay a mortgage or home equity loan for a house owned separately by one spouse.
  • Spouses used community funds to pay unsecured loans like a credit card debt accrued before the marriage.
  • It can even be for a spouse’s time and effort to increase the value of the other spouse’s separate property (such as helping the other spouse’s business succeed or renovating their kitchen).
  • One spouse used money from their inheritance to pay the other spouse’s mortgage or home equity loan.

These and other examples could be addressed using a reimbursement claim. In the first two cases, it is a community property reimbursement claim where the money used for separate property is given back. In the last two examples, a separate property reimbursement claim seeks to shift funds from one spouse to another. However, depending upon responsibility, it may not be for the entire amount (a judge typically would determine the amount as part of the division of assets).

What cannot be reimbursed

The courts have a lot of leeway in approving or denying reimbursements. Those claims typically rejected include:

  • One spouse’s student loans
  • Low-value property contributions
  • A spouse’s living expenses

Resolving these complex issues need knowledgeable guidance

Each spouse may file reimbursement claims with the help of an experienced family law attorney. Those with questions about how separate property, community property and reimbursement claims will affect their divorce can contact an attorney with experience handling these matters in Texas.