If you are getting divorced in California, you may hear the terms “Epstein Credits” and “Watts Charges” used in connection with your shared property. Depending on the facts of your case, these terms may have significant implications in your California divorce. What are Epstein Credits and Watts Charges in a California divorce?
Throughout a marriage, a couple will often incur several shared expenses. If they later decide to divorce, managing these obligations during the process can be complicated. In California, divorce courts have the authority to balance the parties’ respective contributions while the case is pending by using Epstein Credits and Watts Charges.
What are Epstein Credits?
Under California law, a divorce court “has jurisdiction to order reimbursement in cases it deems appropriate for debts paid after separation but before trial.” This reimbursement is known as an Epstein Credit. Epstein Credits reimburse one spouse for paying all of a community debt after a couple separates. These credits can be used to order a non-paying spouse to pay their community share of a marital obligation.
Proving an Epstein Credit
A claim for an Epstein credit will have to be supported by evidence. This typically involves tracking payments made for a community asset. Separating and identifying the creditable amount can be complicated if a spouse’s payments come from a community-shared bank account.
What are Watts Charges?
Watts Charges, also known as Watts Credits, are applicable in a California divorce case when one spouse uses community assets after separation. One of the most common examples is when a spouse continues to live in the couple’s jointly-owned marital residence while the divorce is pending. In that circumstance, the spouse who is not residing in the home can make a Watts Charge against the other for half of the home’s use.
Watts Charges can be applied to vehicles, homes, and other valuable property. When Watts Charges are raised, the court will assess the property’s usage value and require the spouse who is using the property to pay the other spouse for their lost usage. If the asset at issue is a home, the court will usually use fair rental value to determine the amount owed for one partner’s exclusive use of the property.
Proving a Watts Charge
Proving a Watts Charge requires the party to provide evidence of the value of an asset’s use. For example, someone seeking to prove the use of a marital home will need to show its fair market value.
Exceptions to Epstein Credits and Watts Charges
There can be exceptions to Epstein Credits and Watts Charges. For instance, if former spouses had an agreement that allowed one to use and pay debt on the property without charging the other or if the payment and use were intended to be a gift, Epstein Credits and Watts Charges would not be applicable. There can also be circumstances when a property’s value is considered in assessing spousal support. Further, when the using party pays for the community expense, such as an entire mortgage payment, their contribution may offset a claim for reimbursement or charges.
Epstein Credits and Watts charges can be complicated and challenging to establish. Therefore, working with an experienced California divorce attorney is important when these and other community asset issues are raised. Your divorce lawyer can help you evaluate your community property and determine the steps you need to take to protect your interests during every stage of your case.
Contact a California Divorce and Custody Attorney
The attorneys at the Law Offices of Judy L. Burger are experienced California divorce and custody attorneys who can answer your questions about pre-nuptial agreements and other matters. We assist clients along California’s Northern to Southern Coast, including San Francisco, Beverly Hills, Marin, San Jose, Gold River, San Diego, Santa Barbara, Ventura/Oxnard, and surrounding communities. Call us at 415-293-8314 to schedule a private appointment or visit our website.