How to Present a Reimbursement Claim

What are Reimbursement Claims?

A “reimbursement claim” is an attempt by one estate (typically the separate estate of one spouse) to recover money spent on another estate. When this type of cross-estate spending occurs, separate and community assets may become “commingled,” opening the possibility of reimbursement claims. 

Let’s apply this concept to a real-life situation; let’s say a wife purchases a single-family home before marriage. Then, throughout the marriage, both spouses contribute to improvements and renovations of the residence. In this case, the couple’s community estate may have a reimbursement claim against the wife’s separate property for the increase in value of the property caused by the improvements and renovations made during their marriage.

How to Present a Reimbursement Claim

Although property division and reimbursements within a divorce are most frequently settled in mediation, about 5% of cases will go before a judge or a jury instead. Despite these odds, you should prepare yourself to present a reimbursement claim at trial. Either way, here are some steps you will need to complete along the process:

Step 1 – Complete an Inventory

This crucial first step involves identifying all assets and liabilities through a Sworn Inventory & Appraisement. This document will include everything from stocks and retirement accounts to debts and pets. Courts require that parties exchange a property inventory prior to trial. In most cases, parties, with the help of their attorneys, will format this inventory into a spreadsheet.

Step 2 – Identify Community Property

After listing assets on an inventory, one must identify all community property. This can be accomplished by identifying property that was acquired during the course of the marriage, and listing it in a “community” column.

Step 3 – Identify Your Separate Property

After listing and identifying all community property, the same must be done for separate property. Property is separate if it meets any of the following standards:

1. acquired prior to the date of marriage,
2. is a gift,
3. is an inheritance or,
4. is a monetary recovery from a personal injury

Step 4 – List any Reimbursement Claims

At this point, one can list reimbursement claims. For example, one could cite money from an inheritance used for a down payment on a home acquired during the marriage. 

Step 5 – Submit a Proposed Property Division

After the above steps have been completed, it is prudent to have a serious discussion with an attorney regarding what property you would like to keep and what property you would be willing to divide. Then, you will indicate your offers on a spreadsheet called a proposed property division.

Your inventory may look something like this:

The Divestment of Separate Property

A court cannot divide separate property during a divorce. However, it falls upon each party to demonstrate that an asset is their separate property through “clear and convincing evidence.” This high legal standard requires an experienced attorney to demonstrate adequately. In particularly complicated situations, your attorney may suggest that you hire a forensic accountant to conduct  a process called tracing. During this process, an accountant will compile a report which demonstrates the provenance of your separate property assets through “clear and convincing evidence,” proving that they are gifts, inheritances, products of a medical settlement, or were owned prior to the marriage.

You should consult with an experienced attorney who guide you and even help you gather the evidence that you'll need.