Part 1: What are Reimbursement Claims and how Do They Work in a Texas Divorce?

People who are going through a divorce in Texas may have several reasons for feeling that they should receive reimbursement from their soon-to-be-former spouses. As a community property state, Texas law indicates that the distribution of jointly-owned assets by the Court must be done based on what it deems is “just and right.”

This, however, is easier said than done, as even the Court admits that there are certain situations where one spouse may be entitled to reimbursement, even if this compensation can result in what appears to be an unequitable distribution of marital assets.

Take for instance, the hypothetical example of Jane and John Doe.

Jane has owned the family home long before she married John. During the marriage, both spouses combined their income to continue making mortgage payments and make around $40,000 in repairs and improvements—all the while, the title of house remained in Jane’s name. This meant that the home would be considered as “separate property” and would go to Jane should her marriage to John end with divorce.

The problem here is that this separate property now comes with $40,000 worth of repairs and improvements. After all, had the couple used that money to purchase a new car, it would be considered as community property. The Texas Family Code recognizes the imbalance of this scenario, which is why it offers a solution in the form of a reimbursement claim.

Under Texas law, even if a couple owns a “community estate,” or assets owned jointly by the couple, each spouse can still own separate property. In the example above, the house is technically Jane’s separate property despite the $40,000 worth of improvements drawn from community funds. The act of marriage alone does not change the ownership of the home.

What a reimbursement claim does is allow the community estate to recover the money that had been spent to improve Jane’s separate property. If there is a legitimate reimbursement claim to the community estate, however, any money that is obtained does not go directly back to the husband. Instead, the money is lumped together with the other assets in the community property estate, which is then subject to the Court’s division of what it considers “just and right.”

The example of community funds used for home repairs and improvements is just one of many types of reimbursement claims the community estate can make against a separate property of one spouse. For example, mortgage payments shared by the couple can be considered community property assets, particularly if these funds came from shared income. As such, the couple’s community estate could file a Texas reimbursement claim against the wife’s separate property for the total value of the mortgage payments made during the course marriage.

If you have more questions about reimbursement claims in Texas you would like to ask a qualified divorce attorney about, get in touch with Austin family law attorney Daniella Lyttle of the Lyttle Law Firm. Call our offices today at (512) 215-5225, or use our contact form to schedule a consultation about your case.