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Economic Contribution and Reimbursement Claims

Economic contribution has been the bane of the legal community since its introduction; however, the recent legislative session eliminated economic contribution for cases filed after September 1, 2009.  Cases will now revert back to the true and tried equitable principles of reimbursement.

Economic Contribution

Since economic contribution claims only effect cases filed prior to September 1, 2009, we will briefly discuss this topic.  An EC claim is based on the concept that one marital estate benefited the other marital estate and the detriment of the contributing marital estate.  The classic example is when a spouse owned a home prior to the marriage and after marriage the couple lived in that home.  The home is the separate property of the person that owned the home prior to marriage; however, the monies used to pay the monthly mortgage are community property.  Thus, the community estate benefitted one spouse's separate estate.  By applying a mathematical formula, an argument can be made for a portion of the equity in the home.

Reimbursement

Reimbursement claims allow the court to have more latitude to consider all the relative circumstances and then make a division of reimbursment claim that the court considers just and right.  Historically, the courts have recognized two types of reimbursement claims:

  • One estate has paid the debt of another estate.  For example, a spouse uses their separate property inheritance to pay the other spouse's debt or to pay a community debt.
  • The time, toil, talent, and effort of each spouse may be reimbursed to the community estate.  The classic example stems from the wife who worked at her husband's restaurant for 20+ years without receiving any direct wages.  Or, the spouse that uses their skills to make substantial improvements to the home, thus, increasing the home's value.