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Lonich Patton Ehrlich Policastri

How Is Property Divided After Divorce?

September 6, 2019/in Family Law /by Lonich Patton Ehrlich Policastri

Financial issues following a separation can be complicated. Proper divorce planning and record-keeping can be invaluable to a smooth divorce proceeding. Determining what is community property and what is separate personal property can become complicated very easily. For example, you may ask “What happens to my house after divorce?”

Seemingly simple issues such as who stays in the community home and who pays the mortgage after separation carry significant weight. To assist in these issues, Epstein Credits and Watts Charges are used.

Epstein Credits And Community Property

In 1979, the case Marriage of Epstein gave the court the power to order Epstein Credits. Epstein Credits are used to determine the amount one spouse will be reimbursed for debts paid after separation but before trial. Epstein Credits allow a spouse who pays community expenses or debt after separation to be reimbursed for their one-half share of the expense or debt. An example of this is a mortgage on a community property home. This does not apply to separate personal property. 

An attorney signs paperwork dividing community property in a divorce

When requesting Epstein Credits, it is important to keep accurate records. Records should include the expenses or debts made and from what sources the expenses or debts were paid from. The more extensive the records kept, the easier it will be to determine what reimbursement may be made from Epstein Credits. Proper divorce planning can assure you have all the records you need to proceed with this process. Further it is important to raise the issue of Epstein Credits as early as possible. This helps to avoid extra complexity at trial.

Watts Charges And Community Property

The case Marriage of Watts in 1985 introduced the concept of Watts Charges, allowing a spouse to charge the other spouse for the use of a community asset after separation. While Watts Charges can apply to almost any community asset, a common situation that arises after separation is that one spouse will remain in the community owned home exclusively. When one spouse remains in the community home the other spouse may charge that spouse one-half of the community home’s fair monthly rental value.

Courts prefer that prior written notice of the intent to seek Watts Charges be given. This notice simplifies issues at trial. It makes it known that Watts Charges are within the reasonable expectations of the spouses. Like Epstein Credits, the earlier that a claim for Watts Charges are raised the better. The claim will be retroactive to when written notice was given.

Epstein and Watts Together

In some circumstances, Epstein Credits and Watts Charges may partially or even completely offset each other. If a spouse is both living in the community home and paying the mortgage, if the mortgage payment is equal to the value of the monthly rent, the two will offset each other. If however if the value of the rent is higher than the mortgage payment, the difference in value will still be owed to the respective spouse. It is also possible to owe both Epstein Credits and Watts Charges. Consider if a spouse is living in the community home, and the other spouse is paying the mortgage for the property. In this case, the spouse living in the home may owe both the one-half rent and the one-half payment of the mortgage.

An experienced attorney sitting with a client helping to divide up community property in a divorce.

Regardless of the circumstances surrounding separation and community property, these financial issues are complex. They are best addressed by a knowledgeable and experienced attorney. If you are separated or looking at a high net worth divorce, please contact one of the experienced attorneys at Lonich, Patton, Ehrlich, Policastri. They offer a 30 minute free consultation where they can assist you with divorce planning and answer any questions you may have. 

Please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results.  While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

Lonich Patton Ehrlich Policastri

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Lonich Patton Ehrlich Policastri is an established law firm that is conveniently located in San Jose, California. It was founded in 1994 by Michael Lonich and David Patton and has earned its reputation as one of the most respected family law and estate planning firms in California. Lonich Patton Ehrlich Policastri continues to serve San Jose, the Silicon Valley and Northern California. Our attorneys take a genuine interest in our clients' matters and understand their objectives and provide strong legal representation in a timely, effective, and efficient manner. Lonich Patton Ehrlich Policastri focuses exclusively on family law and estate planning.

Tags: community property, divorce, divorce planning, property division, separate property
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Phone: (408) 553-0801 | Fax: (408) 553-0807 | Email: contact@lpeplaw.com

Located in San Jose, Lonich Patton Ehrlich Policastri handles matters for clients in northern California, specifically San Jose and Silicon Valley. Our services are available to anyone within the following counties: Santa Clara, San Mateo, Contra Costa, Santa Cruz, Monterey, and San Benito. For a full listing of areas where we practice, please click here.

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This web site is intended for informational purposes only and is not legal advice. Nothing in the site is to be considered as either creating an attorney-client relationship between the reader and Lonich Patton Ehrlich Policastri or as rendering of legal advice for any specific matter. Readers are responsible for obtaining such advice from their own legal counsel. No client or other reader should act or refrain from acting on the basis of any information contained in Lonich Patton Ehrlich Policastri Web site without seeking appropriate legal or other professional advice on the particular facts and circumstances at issue.

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