Dividing assets during a divorce is rarely as simple as splitting everything 50/50. Often, one spouse has contributed significantly more to joint expenses, paid the mortgage on a shared home from separate property funds, or covered bills after separation while the divorce was still pending. In California, the law recognizes that these types of unequal financial contributions can—and often should—be addressed through reimbursement claims.
If you paid the mortgage, supported your ex, or used your own money to maintain community property during or after your marriage, you may be entitled to credit for those payments. Similarly, if your ex continued to live in the family home after you moved out and didn’t pay rent or buy you out, you may have a right to reimbursement under specific California family law doctrines.
Understanding the rules around Epstein credits, Watts charges, and other types of reimbursement claims can help you make informed decisions during settlement negotiations or litigation. These claims are especially important in high-asset divorces where real estate and cash flow issues are significant.
Let’s break down what these legal principles mean and how they can apply to your case.
What Is a Reimbursement Claim in Divorce?
A reimbursement claim is a request to the court to be repaid or credited for money or value you contributed to a marital or community property expense that benefitted both spouses. These claims are grounded in fairness and equity—California courts aim to ensure that one spouse is not unjustly enriched at the other’s expense.
There are multiple types of reimbursement claims, but the most common ones involve:
- Mortgage or debt payments made from separate funds
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Post-separation support or payments for community obligations
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Occupation of the family home by one spouse after separation
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Use of community property to pay for separate property debts
The two most frequently litigated types are Epstein credits and Watts charges.
What Are Epstein Credits?
Epstein credits refer to a spouse’s right to be reimbursed for using separate property to pay community debts after the date of separation. This concept was established in the case of In re Marriage of Epstein (1979) and is now a widely recognized reimbursement mechanism.
Common Examples of Epstein Credits:
- One spouse pays the mortgage on the community home after separation using their own earnings
- A spouse uses their separate bank account to pay off a joint credit card
- One party covers car payments, taxes, or insurance for a community asset post-separation
To succeed in a claim for Epstein reimbursement, the paying spouse must demonstrate:
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The payments were made from separate property funds
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The debt paid was a community obligation
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The payments were not intended as a gift
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The non-paying spouse did not reimburse the paying spouse in another way
These credits can add up quickly in long divorces, especially when one spouse earns significantly more or maintains the home.
What Are Watts Charges?
On the flip side, Watts charges arise when one spouse occupies or uses a community asset—typically the family residence—after the date of separation, without paying the other spouse for that use. This principle comes from In re Marriage of Watts (1985).
Common Examples of Watts Charges:
- One spouse lives in the family home for months or years post-separation while the other pays the mortgage
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The occupying spouse does not pay rent or offer a buyout
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The property is not generating income for the other spouse during this time
In this scenario, the court may charge the occupying spouse for the reasonable rental value of their exclusive use of the home. That amount can then be credited to the other spouse during property division.
The purpose of a Watts charge is to compensate the non-resident spouse for being denied use of the community asset and to equalize the benefit.
Can Epstein and Watts Be Claimed Together?
Yes—and often they are.
A very common scenario looks like this:
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Spouse A moves out after separation, but continues to pay the mortgage
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Spouse B stays in the house and pays nothing
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Spouse A requests an Epstein credit for mortgage payments
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Spouse B is assessed a Watts charge for use of the house
In such cases, the court may offset the two claims. For example, if Spouse A paid $30,000 in mortgage payments and Spouse B lived rent-free in a home worth $2,000/month in rental value for 12 months, the court may say both parties are “even”—or award the difference if there’s an imbalance.
Documentation Matters
To win a reimbursement claim, documentation is everything. Courts will not award Epstein credits or Watts charges based on verbal claims or vague recollections. You should preserve:
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Bank records showing payment of mortgage or debts from your separate account
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Canceled checks or wire transfers
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Loan statements with proof of payment
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Property tax and insurance receipts
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Texts or emails showing there was no intent to gift the payments
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Rental market comparisons (for Watts charges)
It’s also important to raise these claims early in the case and disclose them in your preliminary declaration of disclosure (PDD). Waiting too long may limit your ability to assert them.
When the Court May Deny Epstein Credits
Even if you meet the legal test, there are situations where the court may deny or reduce Epstein credits:
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If the payments were for child support or spousal support, which are not reimbursable
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If you intended the payments as a gift
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If you had exclusive use of the asset, such as a car or home
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If the payments also benefitted you directly
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If you already received reimbursement in another form (e.g., temporary spousal support)
Each case is fact-specific. Courts have broad discretion in evaluating whether awarding credits is equitable.
Gray Areas and Litigation Risks
Reimbursement claims can be contentious, especially in cases involving:
- One spouse staying home with children while the other pays bills
- Disputes over the value of “free rent” or unpaid contributions
- Real estate owned jointly but maintained by one spouse
- Claims of commingling or misuse of community funds
- Failure to properly trace funds back to separate property
In high-asset or high-conflict divorces, these disputes often require testimony from forensic accountants or real estate valuation experts. They can have significant implications on overall settlement value and negotiation leverage.
Reimbursement Claims and Settlement Strategy
While these claims are enforceable in court, they are often negotiated privately during mediation or settlement talks. A spouse entitled to Epstein credits may waive them in exchange for a larger share of another asset. Similarly, a spouse facing Watts charges may offer a reduced buyout to avoid the charge.
Reimbursement claims can also impact support negotiations. For example, if a higher-earning spouse has paid all expenses post-separation, they may argue for reduced temporary support obligations in light of those contributions.
A smart settlement strategy considers not just the math, but also the emotional, practical, and legal leverage that comes with asserting (or avoiding) these claims.
How to Protect Yourself Moving Forward
If you’re newly separated and expect a long divorce process, now is the time to protect your rights and build a reimbursement claim if needed. Here’s what you should do:
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Keep separate financial records from the date of separation forward
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Track all payments you make toward community debts or shared expenses
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Avoid commingling separate funds with joint accounts
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Talk to a family law attorney about how to structure post-separation finances to preserve reimbursement rights
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Consider how these claims fit into your overall divorce strategy, including support and asset division
You may not be able to avoid all out-of-pocket costs during separation, but you can position yourself to be credited fairly later.
Final Thoughts
In California divorces, reimbursement claims can make a significant difference—particularly in high-asset cases where mortgage payments, rent-free living, or financial imbalances exist after separation. If you’ve paid more than your share or supported your ex through the process, it’s worth exploring whether Epstein credits, Watts charges, or other claims apply.
At Minella Law Group, we understand the complexity and nuance of reimbursement law. We’ve helped hundreds of clients assert—and defend against—these claims in ways that protect long-term financial security and ensure fair outcomes.
Need to Recoup What You’ve Paid Since Separation?
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