How Do Epstein Credits and Watts Charges Affect Your Divorce?


What happens is a party uses their separate property for post-separation maintenance of community assets? Or, if a spouse loses access to a community property? That is where Epstein Credits and Watts Charges can come in.


What is an Epstein Credit?


An “Epstein Credit” is a reimbursement or “credit” that a spouse can seek if they use separate property income to pay the community property debt of one-half the payment made. For example, Wife solely pays for the mortgage of the community property family home after separation. Wife would then be entitled to a reimbursement or credit equal to one-half of all the mortgage payments she made after separation from Husband from her separate property income.


What is a Watts Charge?


A “Watts Charge” is a “charge” against a spouse of one-half the value of the other spouse’s exclusive use of a community property asset after separation. For example, Husband moves out of the family home after separation. Thus, Wife remains in the home and has exclusive use of it. The value the Husband uses for a Watts Charge on the family home is the fair rental value of the residence. For every month that Wife has exclusive use of the residence, Husband can “charge” one-half of the fair rental value against Wife.


Can you Receive both Epstein Credits and Watts Charges?


Epstein Credits and Watts Charges can sometimes cancel each other out or double up on a spouse. For example, Husband leaves the home on the date of separation. Wife subsequently pays for the mortgage after separation ($3,000.00 a month). The fair rental value of the family residence is $3,000.00 per month. Husband would be entitled to an “Epstein Credit” of $1,500.00 (one-half of $3,000.00), but Wife would get Watts Charges of $1,500.00 (one-half of $3,000.00). Thus, they would cancel out regarding the family residence. However, if Wife was the one who moved out AND paid the mortgage, she would be entitled to both Epstein Credits and Watts Charges against Husband.


However, it is important to note that neither are automatic, they must be requested.


As always, having an experienced family law attorney by your side, assisting you in determining both Epstein Credits and Watts Charges, can help protect your rights. Contact The Reape-Rickett Law Firm today at (888) 846-6166 or visit our Contact Us page to connect with an experienced and compassionate family lawyer.

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