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Divorce can be complicated in so many ways. One thing that really complicates divorce is when there are community assets and debts involved. It's generally considered good practice to establish the date of separation because any property you acquire after this date will be considered separate property. Hence, any property you acquire prior to the date of separation may be considered community property. The same goes with any debt you incur. However, since the divorce timeline is rarely clear and straightforward, sometimes you end up paying community debts with separate funds.
When a spouse pays for a community debt using separate funds before the date of separation, the presumption is that it is a gift to the community property. On the other hand, this presumption cannot be applied should the payment be made to a community debt after the date of separation, which is why it is very important that you establish the date of separation and keep good financial records of payments you made and where you got the funds to pay for these debts after the separation. The date of separation plays a huge part in whether you can reimburse the amount you paid or not, which is also what makes this date a point of contention for a lot of couples who don't make it a point to clear it up from the get go.
A trial court has the authority to order reimbursement of separate funds used to pay community debts, and it also has the authority to deem reimbursement inappropriate. Reimbursements can be considered inappropriate when:
- The parties had a prior agreement that there would be no reimbursement.
- The payment was really intended as a gift to the community, regardless of whether it was given after the separation date.
- The payment was to settle the debt for the preservation or acquisition of an asset which the payor is/was using and the amount paid for the debt was not substantially in excess of the value of using the asset.
- The payments constitute a discharge of the support duties of the payor.
Should a spouse continue to use a community asset between the time of the separation and the time when the asset is not considered a matter of community interest (such as the use of a car), the spouse may be charged a reasonable amount for using the community property. So if a spouse uses the car (which is a community property), the other spouse has the right to ask the court to get payment for community for the use of the car between the separation date and the date of the divorce settlement.
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