Claims for Reimbursement

What is a Reimbursement Claim?

A reimbursement claim is when through divorce one marital estate seeks to recover money from another marital estate in a divorce. In Texas, the marital estates are: the community estate, the husband’s separate estate, and the wife’s separate estate. It is most common for the community estate to seek recovery of the money it spent for either the husband’s or wife’s separate estates. For example, a husband may own a house prior to marriage. This house is the husband’s separate property. If the married couple used community funds to build a $20,000 pool on the property, a reimbursement claim would allow the community estate to recover that $20,000 spent for the capital improvement on the husband’s separate property.

What Types of Reimbursement Claims Exist?

The Texas Family Code § 3.402 allows for the following reimbursement claims:

1. payment of unsecured debts;
2. inadequate compensation for the time, toil, talent, and effort of a spouse by a business entity under the control and direction of that spouse;
3. the reduction of the principal amount of a debt secured by a lien on property owned before marriage, to the extent the debt existed at the time of marriage;
4. the reduction of the principal amount of a debt secured by a lien on property received by a spouse by gift, devise, or descent during a marriage, to the extent the debt existed at the time the property was received;
5. the reduction of the principal amount of that part of a debt, including a home equity loan:
   1. incurred during a marriage;
   2. secured by a lien on property; and
   3. incurred for the acquisition of, or for capital improvements to, property;
6. the reduction of the principal amount of that part of a debt:
   1. incurred during a marriage;
   2. secured by a lien on property owned by a spouse;
   3. for which the creditor agreed to look for repayment solely to the separate marital estate of the spouse on whose property the lien attached; and
   4. incurred for the acquisition of, or for capital improvements to, property;
7. the refinancing of the principal amount described by Subdivisions (3)-(6), to the extent the refinancing reduces that principal amount in a manner described by the applicable subdivision;
8. capital improvements to property other than by incurring debt; and
9. the reduction by the community property estate of an unsecured debt incurred by the separate estate of one of the spouses.

What Claims for Reimbursement Are Not Allowed?

The Texas Family Code § 3.409 disallows the following reimbursement claims:

1. the payment of child support, alimony, or spousal maintenance;
2. the living expenses of a spouse or child of a spouse;
3. contributions of property of a nominal value;
4. the payment of a liability of a nominal amount; or
5. a student loan owed by a spouse.

What Can a Judge Do About a Reimbursement Claim?

The judge has total discretion on whether to recognize a claim for reimbursement and how to make an award based on the claim. If the judge grants a spouse’s claim for reimbursement, the Court can:

• Divide the reimbursement claim as part of the division of the community property. Going back to our married couple who built a $20,000 pool on the husband’s separate property – the community estate has a valid reimbursement claim of $20,000 against the husband’s separate estate because the $20,000 came from community funds. This reimbursement claim would be divided between the parties.
• Grant a money judgment against one spouse in favor of the other.
• Award specific items of property to a spouse as compensation for the reimbursement claim.
• Impose an equitable lien on the benefitted separate property. The lien can only attach to the property benefited by the payments that gave rise to the claim.

What Are the Defenses to a Reimbursement Claim?

Possible defenses to a reimbursement claim are: (1) a reimbursement would be unfair under the circumstances, (2) the reimbursement claim should be offset by another reimbursement claim against the community estate, (3) the reimbursement claim should be offset because the community estate enjoyed the benefits of the expenditures, or (4) the reimbursement claim cannot be proven and traced with admissible evidence.

Reimbursement in the Context of Medical Support After Divorce

Sometimes, a divorce decree will require one spouse to reimburse the other spouse for out-of-pocket medical expenses incurred for children. The divorce decree will usually specify that the spouse who paid the medical expenses out-of-pocket must notify the other spouse of those medical expenses within a certain number of days. If the paying spouse complies with the decree and notifies the other spouse within the required number of days by sending that spouse an invoice or receipt, the non-paying spouse must reimburse the paying spouse for whatever amount is stated in the decree (usually one-half). If the paying spouse fails to comply with the divorce decree and does not notify the non-paying spouse of the medical expenses within the required time frame, the non-paying spouse is under no obligation to reimburse the paying spouse.