Using Separate Property to Improve the Other Spouse’s Separate Property
Sometimes, over the course of a marriage, there are transactions between spouses which may result in reimbursement of separate property. That is the subject of this article.
Let’s say Charley and Vanessa are married. Before they got married, Charley had inherited from his parents their family home. It is on a lake outside the city of New Orleans. Sometimes, he and Vanessa go there in the summertime. They have not been going to the house lately though, because it is in disrepair.
A few years after they get married, Vanessa inherits money from a deceased uncle. Charley asks her if she will use some of the money to fix up his family’s old house on the lake. Vanessa agrees, and spends fifty thousand dollars of her inheritance to fix up Charley’s family home.
Now let’s say that Charley and Vanessa decide to get a divorce. They are in the process of trying to divide up their property. The fifty thousand dollars which Vanessa spent on Charley’s lake house becomes an issue between them and their respective lawyers.
According to Louisiana Civil Code article 2367.1, if one spouse uses their separate property to improve the other spouse’s separate property, and does so during the existence of the community regime, than the first spouse is entitled to reimbursement for their separate property used.
In our hypothetical scenario, we can see how this Code article might be applied. Charley inherited his family’s old house before he married Vanessa. These facts suggest that it is his separate property for two reasons: 1) he acquired it before marrying Vanessa, and so before the community regime was created and 2) he inherited the property. Generally, inheritances to one spouse are considered that spouse’s separate property. For the same reason, Vanessa’s inheritance from her uncle is probably also her separate property. That means obviously that the fifty thousand dollars she spent to improve Charley’s family home was also her separate property.
While it is impossible to say for certain, a likely result in the above example would be that, when Charley and Vanessa are divorced, Charley will owe her the fifty thousand dollars.
Remember that most divorces have many incidences like the above example. That is to say, Charley and Vanessa very well might have other pieces of community property, or intertwined community and separate property. If dividing the assets becomes an issue, a court can weigh the respective assets and come to a conclusion about what each spouse is entitled to after everything has been divided. For example, if a court concludes that Charley and Vanessa have a community regime worth 300,000 thousand dollars, than each would be entitled to 150,000 dollars. However, Charley’s debt to Vanessa could reduce his share to 100,000 dollars.
This article is written to be general information only; it should not be taken as formal legal advice. Will Beaumont. New Orleans.
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Collecting reimbursement can become a problem where there is insufficient documentation. For more information on this topic, contact an attorney here.