You and your spouse are considering calling it quits on your marriage, and you no doubt have a lot on your mind about your finances will work both during the divorce and after the divorce. Questions like: How will we divide our property? Will one of us pay the other spousal support? What happens to our credit card debt? All great questions, but one additional big question many couples face these days is the issue of a costly education for one spouse that was paid for during the marriage, either by one spouse entirely or both spouses. Maybe you spent $50,000 to send your spouse to nursing school, acting school, rodeo clown school, law school, or any other type of educational program during the marriage and now that other spouse will enjoy a higher income which you will not benefit from. In some cases, California law allows for reimbursement for payments made for the other spouse’s education, regardless of which spouse’s income paid for the education.
When Reimbursement Is Available
Under California’s Family Code 2641(b)(1), the law states, “The community shall be reimbursed for community contributions to education or training of a party that substantially enhances the earning capacity of the party.”
What this means in plain English is that if payments were made for a spouse’s education by either you or your spouse with income earned during the marriage, and the education gave the other spouse a substantially higher earning capacity (which is different from actual earnings level), then you are entitled to have that money returned to the community and split between you and your partner in a divorce, subject to the exceptions below. To give an example, if your husband spent $200,000 on a law school education with money that he earned during your marriage, and yet he decided he did not want to be a lawyer after all despite having the capacity to earn more, you can petition the court to have your husband repay the $200,000 to the community funds which are split 50/50 between the spouses, meaning you should get $100,000 back.
The Exceptions to Reimbursement
As with many areas of law, there are a number of exceptions to the above rule. Reimbursement may not apply or may be reduced in the following three scenarios:
- “The community has substantially benefited from the education, training, or loan incurred for the education or training of the party.” Thus, if the educational payments in question occurred long in the past, e.g. 10 years or longer ago, reimbursement may not apply.
- “The education or training received by the party is offset by the education or training received by the other party for which community contributions have been made.” If both you and your spouse received similar educations paid for by community funds, reimbursement may not apply or may be lowered.
- “The education or training enables the party receiving the education or training to engage in gainful employment that substantially reduces the need of the party for support that would otherwise be required.” If your spouse’s education negates the need for you to pay spousal support, this may also reduce or eliminate reimbursement.
Speak with a California divorce attorney for more information on how reimbursement might affect you in your divorce.
For any questions on divorce law in California, contact the Law Office of Kelley Finan today to schedule a consultation to discuss your circumstances.