During a California divorce, Epstein credits allows one spouse to be reimbursed for payments they make on a community debt from their separate property sources. A common community debt is a home loan. Upon separation, should one spouse use their income (which is now their separate property) to pay the home mortgage, they will be entitled to reimbursement. Watts charges allows the community to be reimbursed when one spouse uses community funds to pay for their separate property.
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Epstein Credits Watts Charges
Epstein credits Watts charges refer to two California cases and are terms used for reimbursement to one spouse when the other spouse has sole use of a community asset. This most often applied when one spouse remains in the family home and the other (the out-of-house spouse) makes mortgage payments. If you are staying in your home and your spouse is paying the mortgage, your divorce settlement may be significantly reduced for amounts owed to your out-of-home spouse.
In 1985, California courts determined that a spouse who uses community property, after the date of separation, for their separate property interest, may be ordered pay to reimburse the other spouse for using the community property. A spouse who occupies a family home (community property) will pay the out-of-home spouse rent for living there. The out-of-house spouse may claim up to half the rental value of the property. If the home’s rental value is higher than the mortgage payment, the occupying spouse could lose money by staying in your home.
In 1979, the California courts determined that a spouse who pays a community debt, using his separate funds, is owed a credit on the payment. If one spouse pays the mortgage on the family home, they are entitled to reimbursement equal to one-half the amount paid.
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