There is a reimbursement claim that is often missed by family law attorneys
because it is an exception to community property principles. The basic rule of
community property is that all debts or assets acquired during marriage belong to both spouses.
Such community debts and assets are equally divided.
However, this rule does not apply to loans and expenses incurred or paid
during a marriage for a spouse's education. A spouse may have a right
to be reimbursed for half the costs spent during the marriage for their
partner's education, plus interest at the rate of 10%. The statutes
that address this are in the California Family Code, sections 2627 and 2641.
First, an outstanding loan incurred during marriage for a spouse’s
education or training must be assigned for payment to the spouse that
received the education. It is disregarded in effecting an equal division
of community property. However, the court has the authority to reduce
or modify this assignment to prevent the assignment from being "unjust."
Second, community contributions made during marriage to the education of
a spouse that substantially enhances his or her earning capacity, shall
be reimbursed to the community at the "legal rate of interest"
- 10% in California - unless the court deems that settlement unjust.
In other words, if earnings during marriage are used to pay Spouse A's
education loans and expenses, at the time of dissolution, Spouse A must
reimburse Spouse B for half those payments plus 10% interest.
Under what circumstances would a judge find that arrangement to be unjust?
The court can consider a number of factors, including whether the community
has already substantially benefitted from the education's costs. This
is presumed to have occurred if the loans and payments took place more
than 10 years prior to the commencement of dissolution proceedings.
Other considerations include whether Spouse B also had education loans
and expenses paid during the marriage, or if Spouse A's education
loans substantially reduced the need for spousal support.
If you have questions regarding
property division or the
divorce process, our lawyers at The Buncher Law Corporation are available to discuss
your case and concerns during a personalized consultation. Contact us
today to get started! We serve clients throughout Orange County from our