The How and Why Behind Reimbursement Claims – Part IV
We are reaching the end of our blog series on reimbursement claims in divorce-related matters. If you’ve been following along, you know Texas law affords a spouse the right to recover contributions made by one marital estate (you) to another (your spouse). But the process is not as simple as you may think.
There are three elements that first must be established by the spouse seeking reimbursement.
- That a contribution was made by one marital estate to another
- That the contribution was reimbursable
- The value of the contribution
We’ve discussed the first two elements in previous blogs. Now it’s time to delve into the third element: Establishing a value for the contribution you have made to another marital estate.
The main point you want to remember when placing value on any reimbursement claim is that rather than focus on finding a value that is 100 percent accurate, a petitioner merely needs to provide enough concrete evidence to support a value of some kind. If the petitioner’s testimony is too vague, he or she will have a more difficult time getting reimbursed.
Below is a list of examples of reimbursable claims per the Texas Family Code, many of which were mentioned in Part III of this series, along with an explanation of how the value for each is determined.
Payment of unsecured liability or to reduce principal on secured debt
The value of the contribution is equal to the amount of the payment. For example, a spouse can be reimbursed in full if the dollar amount deducted from his or her paycheck was used toward the other spouse’s IRS debt.
Payment for capital improvements
If the contribution resulted in capital improvements to property owned by the other marital estate and did not result from incurring a debt, the value of the contribution is measured by the change in value to the marital estate that benefited from the contribution. With that said, the petitioner must prove that the increase in value is the direct result of the capital improvements – merely showing the value has increased over time is not sufficient.
Spouse’s time, toil, talent, and effort (Jensen Claim)
The TFC “does not specify how to value a spouse’s TTT&E, and no court has addressed what evidence is needed to prove this value under the code.” Under the Jensen claim for spouse’s TTT&E, a spouse must prove the value of the uncompensated time, toil, talent, and effort AND that this value exceeded what was reasonably necessary to manage and preserve the separate property. If successful, the petitioner can only receive the value of the uncompensated TTT&E, not the enhanced value of the separate property.
Non-capital improvements to real property
If the petitioner is seeking reimbursement for a noncapital improvement, the contributing estate can recover the dollar amount of the contribution.
Contributions toward initial purchase price
The contributing estate can recover the dollar amount of the contribution.
Life insurance premiums
The contributing estate can recover the amount of premiums it paid.
Guarantees of debt
The amount the contributing estate can recover from guarantees of debt is unclear. Some courts suggest the value of such a claim would have to be based on the percentage of risk undertaken by the contributing estate to secure the loan, and a dollar value would have to be assigned to that risk through expert testimony.
The amount the contributing estate can recover depends on the type of contribution made. For example, a court could permit a wife to recover improvements she made to her husband’s separate property before marriage. At common law, a reimbursement claim for improvements to another estate was measured by the enhancement value to the benefited estate, states the Texas Family Code.
For your reference, here are the links to the three previous blogs on reimbursement claims.
If you are going through a divorce and feel you are entitled to be reimbursed for specific expenses, contact Nelson Law Group, PC to learn more about how this law relates to your specific situation. As we’ve said time and time again, every divorce case is different, and requires a keen legal eye to decipher what is just and right for each party involved. We are always accessible, and we truly love hearing from our clients. Contact Us!