WPC% 9'= U7 ~VN=iyacTh/9']5/2bӛ2/JTE1Kxθ|^FII%5xPQPA,Xi@r%Y4p룓&g:1ׁd1gwӼ5D,ʹ_8Ft؀86Ǩ簿 .eXbE{0\~}pZo+3@X^cH2$; _h'3S%0HvیwruU=󡎥5> (_17  2( 4 <DL223  Ԁ2( 4 <DL2  *DD (_16   ," <DL,23  Ԁ," <DL,   *55 (_15  ) <DL)23  Ԁ) <DL)  *22 (_14 ` &<<DL&23  Ԁ&<<DL& ` *// (_13  #DL#23  Ԁ#DL#  *,, (_12   DL 23  Ԁ DL  *)) (_11 h DDL23  ԀDDL h *&& (_10  L23  ԀL  (## &_9   L23  Ԁ L  (>> &_8  2( 4 <DL223  2( 4 <DL2  (DD &_7   ," <DL,23  ," <DL,   (55 &_6  ) <DL)23  ) <DL)  (22 &_5 ` &<<DL&23  &<<DL& ` (// &_4  #DL#23  #DL#  (,, &_3   DL 23   DL  ()) &_2 h DDL23  DDL h (&& &_1  L23  L  &## $_   L23   L  %2A`ArialTT.\  `0TimesNewRoman,Italic<6XA`(ArialTT%2A`ArialTTTable_ATable_BTable_CTable_DTable_ETable_F  $!X XXX  USUS.,  _DXX @  ECONOMICCONTRIBUTIONFORDUMMIES  @(SPECIFICALLY,FAMILYANDPROBATELAWYERS) (   ECONOMICCONTRIBUTIONTITLEONE,SUBCHAPTERE P TEXASFAMILYCODE #X XDh#DXX  (x % #X XD# DXX WHATISECONOMICCONTRIBUTION?  T    (x3Thestatuteusuallyappliestorealestatesituations(althoughthestatute |  says propertyandthuscouldconceivablyincludeanautoorother   asset).Theremustbeeither   " 3"   323  0    adebtforpurchasemoneyorcapitalimprovements,securedby &  alien,whichisreducedduringmarriage, 3݌D (#(# Ќ  " 3"   323  0    orcapitalimprovementsduringmarriage. 3E݌b (#(# Ќ  Allothersituationsinvolvingpaymentofunsecureddebtstillfallunder 0  thepriorequitablereimbursementcaselaw.Nolienfordebt,nocapital N improvements,noeconomiccontribution.TheTexasEconomic l Contributionstatuteisfoundat3.401oftheTexasFamilyCode.The  statutewasfirstpassedin1999,underwentamajorrevisionin2001,  andwasamendedagainin2003(toremoveaquirkthatundersome  situationsallowedfordoublereimbursement).Thepurposeofthestatute 4 istotakesomeofthediscretionawayfromthecourtswhencertain R equitablereimbursementsituationsarise.Thestatutecomesintoplay  p whenthecommunityisdissolved,eitherbydeathordivorce. > Therearethreemaritalestates: \  (#3x " 3"   3 2#  1  .3  0    husbandsseparate 3 M ݌z(#(# Ќ  " 3"   3 2#  2  .3  0    wifesseparate 3 + ݌ (#(# Ќ  " 3"   3 2#  3  .3  0    thecommunity 3  ݌!(#(# Ќ  Whenfundswerespentduringthemarriagebyoneestatetoenhance "$ anotherestate,therehaslongbeenanequitablerightofreimbursement. #B Sincethecourtwasactinginequity,itwasrequiredtoconsider all %`   factorstodeterminewhatwasfair.Toooften,thefollowingsituationwas 4&! setup: R'" 0  Husbandownedrawlandbeforemarriage.Aftermarriage,the p(#  partiesbuiltahouseonthepropertywithcommunityfunds.When )$! wiferequestedthatthecommunitybereimbursedforthe *%" contributiontoHsseparateproperty,Hcounteredwiththe +'# argumentthatwhilehisseparatepropertywasenhancedbythe ,8($ $200,000.00house,ifyouoffsetthefactthattheygottolivethere  rentfreefor20years(reasonablerentbeing$1,000.00permonth  x240months=$240,000.00),andconsideringthetaxdeductions < forowningtheproperty,thecommunityactuallyoweshimmoney! Z(#(# Theequitablecontributionstatuteoverrulesthat offsetargumentby F  devisingaformulatodeterminetheamountthatcomesbackintothe d  communityundertheabovefactsituation.Thestatutespecifically   disallowsanyoffsetfortheuseandbenefitoftheproperty3.403(e),as   wellasforpaymentoftaxesandupkeep.    WHENDOESTHESTATUTEAPPLY?  J  Thesituationswherethestatutewillapplyarewhen,duringthe "r  marriage,oneestatesassetsareusedforthebenefitofanotherestate. @  Themostcommonexamples: ^   (y3" 3"   323  0    onepartyownedseparaterealestatepriortomarriage,andafter  marriage,themortgagewasreducedwithcommunityproperty  funds(e.g.,thepartiesearnedincome). 3݌&(#(# Ќ  " 3"   323  0    aftermarriage,onespouseusedinheritanceorotherseparate b moneytoreducethemortgageoncommunityrealestate. 3K݌0(#(# Ќ  " 3"   3^23  0    aftermarriage,theseparatepropertyrealestatewasrefinanced. 3^݌l(#(# Ќ  " 3"   3V23  0    aftermarriage,separatepropertyrealestatewasimprovedby   house,garageconversion,pool,orothercapitalimprovement. 3V݌!(#(# Ќ  WHATDOINEEDTOKNOW,ANDCANIAVOIDDOINGANYMATH?  $R Mostcalculationsrequirethreenumbers: H&! ! ! (#3y " 3"   32#  1  .3  0    _FMV_Ԁofthepropertyonthedateofdeathordivorce.Fromthis (#  numberissubtractedthebalanceofanyliens. 3݌)$!(#(# Ќ  " 3"   3A2#  2  .3  0    _FMV_Ԁofthepropertyonthedateofthefirstcontribution.Thiswill +.'# usuallybethedateofmarriageifthereisanexistingnoteonthe ,L($ property(whentheymakethefirstpaymentonthenote),orthe  daythatthepoolisbuilt,orthedateofthehomeequityloan. 3An݌(#(# Ќ  " 3"   3q2#  3  .3  0    Theamountofeconomiccontribution.Thiswillbetheamountof  Z themortgagereductionduringmarriageorthedollaramountofthe ( x addedswimmingpoolorothercapitalimprovement. 3q݌F (#(# Ќ  No,youcannotavoiddoingalittlemath.Youmustbeabletocipher   (add,subtract,multiplyanddividethirdgradestuff).Hereisthe   formula(donottuneoutyet,itiseasierthanitlooks):   ,D,,* ddd Xdd Xdd X(#(#,,h+  1'h h  1<( 4 <DLX< #,,;!#,,Definitions  h   #,,"#,, 6,h   6CEC=ClaimforEconomicContribution    6,  6PP=PurchasePrice  F  6,F  6DoDeq=DateofDivorceEquity  `  6,`  6DoMeq=DateofMarriageEquity    :0  :ECC=EconomicContributionbyContributingEstate 9/4   9ECB=EconomicContributionbyBenefittedEstate    6,  6 'X3 ' ?5X3  ? #,,$##,,Formula  r  #,,&#,, 6,r  6CEC=DoDeq*ECC/(ECC+DoMeq+ECB)  6  6,6  6DoDeq=FMVMtgBal  P    6,P !  6DoMeq=DPECC  ! "  6,! #  6ECB=PPDPMtgBal  $#t$ $$#t%  $#,,,'##D,!#DD̀ THECLAIMISCALCULATEDBYDIVIDINGTHETOTALECONOMIC % & CONTRIBUTIONBYTHETOTALEQUITYINTHEPROPERTYAND &"' MULTIPLYINGTHATPERCENTAGEBYTHEEQUITYATTHETIME '8#( OFDEATHORDIVORCE. )V$) Letsworksomeproblems:  B+&+ EXAMPLEONE:  PURCHASEPRICEOFRESIDENCE:$80K  DOWNPAYMENT:$15K < _ORIG_Ԁ_MTG_ԀBALANCE:$65K  Z MORTGAGEREDUCTIONBEFOREMARRIAGE:$15K ( x VALUEOFRESIDENCEONDATEOFMARRIAGE:$100K F  _MTG_ԀBALONDOM:$50K d  EQUITYINPROPERTYONDATEOFMARRIAGE:$50K   _MTG_ԀREDUCTIONDURINGMARRIAGE:$30K   VALUEOFRESIDENCEONDATEOFDIVORCE:$200K   _MTG_ԀBALANCEONDATEOFDIVORCE:$20K ,  NETEQUITYONDATEOFDIVORCE:$180K J  FORMULAFOREXAMPLEONE: T Ѐ30K(COMMUNITYPAYMENTS)/30K+50K(EQUITYONDATEOF r MARRIAGE)=37.5%X180K(EQUITYONDATEOFDIVORCE)=  $67,500BROUGHTBACKINTOTHECOMMUNITYTODIVIDE.     EXAMPLETWO:SAMEASABOVE,BUTPROPERTYHASNOT  APPRECIATED._FMV_ԀSTILL$100K:  PURCHASEPRICEOFRESIDENCE:$80K < DOWNPAYMENT:$15K  Z _ORIG_Ԁ_MTG_ԀBALANCE:$65K ( x MORTGAGEREDUCTIONBEFOREMARRIAGE:$15K F  VALUEOFRESIDENCEONDATEOFMARRIAGE:$100K d  _MTG_ԀBALONDOM:$50K   EQUITYINPROPERTYONDATEOFMARRIAGE:$50K   _MTG_ԀREDUCTIONDURINGMARRIAGE:$30K   VALUEOFRESIDENCEONDATEOFDIVORCE:$100K ,  _MTG_ԀBALANCEONDATEOFDIVORCE:$20K J  NETEQUITYONDATEOFDIVORCE:$80K h  FORMULAONEXAMPLETWO: r $30KCOMMUNITYPAYMENTS)/30K+50K(EQUITYONDATEOF  MARRIAGE)=37.5%,BUTTHISTIMEITISOFCURRENTEQUITYOF  $80K,MEANING$30KBROUGHTBACKINTOTHECOMMUNITYTO  BEDIVIDED,THEREMAINING$50KEQUITYREMAINSSEPARATE : PROPERTY. X   &v EXAMPLETHREE:  SAMEASABOVE,BUTPROPERTYVALUEHASDECLINEDSINCE  MARRIAGETO$80K < PURCHASEPRICEOFRESIDENCE:$80K  Z DOWNPAYMENT:$15K ( x _ORIG_Ԁ_MTG_ԀBALANCE:$65K F  MORTGAGEREDUCTIONBEFOREMARRIAGE:$15K d  VALUEOFRESIDENCEONDATEOFMARRIAGE:$100K   _MTG_ԀBALONDOM:$50K   EQUITYINPROPERTYONDATEOFMARRIAGE:$50K   _MTG_ԀREDUCTIONDURINGMARRIAGE:$30K ,  VALUEOFRESIDENCEONDATEOFDIVORCE:$80K J  _MTG_ԀBALANCEONDATEOFDIVORCE:$20K h  NETEQUITYONDATEOFDIVORCE:$60K 6  FORMULAONEXAMPLETHREE:  $30KCOMMUNITYPAYMENTS)/30K+50K(EQUITYONDATEOF  MARRIAGE)=37.5%,BUTTHISTIMEITISOFCURRENTEQUITYOF  $60K,MEANING$22,500BROUGHTBACKINTOTHECOMMUNITY : TOBEDIVIDED,THEREMAINING$37,500EQUITYREMAINS X SEPARATEPROPERTY. &v THISRESULTSINANETLOSSTOTHECOMMUNITYCOMPARED D WITHITSCONTRIBUTION. b    EXAMPLEFOUR:  SAMEASABOVE,EXCEPTRESIDENCEPAIDFORWHENMARRIED,  ANDTHEREAFTERSEPARATEPROPERTYINHERITANCE < IMPROVESPROPERTYWITHA$50KSWIMMINGPOOL.WHEN  Z IMPROVEMENTSBEGIN,PROPERTYISWORTH$140K. ( x PURCHASEPRICEOFRESIDENCE:$N/A F  VALUEOFRESIDENCEONDATEOFMARRIAGE:N/A d  EQUITYONDATEOFIMPROVEMENTS:$140,000   COSTOFIMPROVEMENTS:$50,000   VALUEOFRESIDENCEONDATEOFDIVORCE:$250K   NETENHANCEMENTINVALUE:$60,000. ,  FORMULAFOREXAMPLEFOUR: 6  50K(COSTOFIMPROVEMENTS)/THESUMOF$50KPLUS$140K T (EQUITYONDATEOFIMPROVEMENTS)=26.3%X$250K(EQUITY r ONDATEOFDIVORCE)=$65,789REIMBURSEMENTTOTHE  SEPARATEPROPERTYESTATEOFTHEPARTYWHOPAIDFOR  THESWIMMINGPOOL    X   <( 4 <DLX<:D DSUGGESTEDLANGUAGEFORPLEADINGS  ThefollowinglanguageistakenfromtheTexasFamilyPracticeManual,2nd L edition. "r CAPITALIMPROVEMENTS n  #D :DE>#9DD  Thecommunityestatehasexpendedfundsorassetstomake   capitalimprovementsonpropertyclaimedbyRespondentasseparate   property,givingrisetoaclaimforeconomiccontributioninfavorof >  thecommunityestateandagainstRespondent'sseparateestate.  \  PetitionerrequeststheCourttograntPetitioner'sclaimforeconomic *z  contribution,orderadivisionoftheclaimtoPetitioner,and,if H  necessary,imposeanequitablelienonRespondent'sseparateestate f  oranyotherpropertyawardedtoRespondenttosecuretheclaim.  AND/OR    Petitioner'sseparateestatehasexpendedfundsorassetsto L makecapitalimprovementsoncommunityproperty,givingrisetoa j claimforeconomiccontributioninfavorofPetitioner'sseparateestate 8 andagainstthecommunityestate.PetitionerrequeststheCourtto V grantPetitioner'sclaimforeconomiccontributionand,ifnecessary, t imposeanequitablelienonthecommunityestatetosecuretheclaim.  AND/OR     Petitioner'sseparateestatehasexpendedfundsorassetsto  #Z makecapitalimprovementsonpropertyclaimedbyRespondentas ($x separateproperty,givingrisetoaclaimforeconomiccontributionin F%  favorofPetitioner'sseparateestateandagainsttheRespondent's d&! separateestate.PetitionerrequeststheCourttograntPetitioner's '" claimforeconomiccontributionand,ifnecessary,imposean (#  equitablelienonrespondent'sseparateestateoranyotherproperty )%! awardedtoRespondenttosecuretheclaim. *,&" REDUCTIONOFSECUREDDEBT -h($ Ї  Respondentisorwasobligated_on[a_]_debt[s_]secured_by[a_]  _lien[s_]onpropertyclaimedbyRespondentasseparateproperty.The  communityestatehasexpendedfundsorassetsforpaymentof < [that/those]_debt[s_].Thoseexpenditureshaveresultedinthe  Z reductionoftheprincipalof[that/those]_debt[s_],givingrisetoaclaim ( x foreconomiccontributioninfavorofthecommunityestateand F  againstRespondent'sseparateestate.PetitionerrequeststheCourt d  tograntPetitioner'sclaimforeconomiccontribution,orderadivision   oftheclaimtoPetitioner,and,ifnecessary,imposeanequitablelien   ontheRespondent'sseparateestateoranyotherpropertyawarded   toRespondenttosecuretheclaim.   p  ,  AND/OR h    Thecommunityestateisorwasobligated_on[a_]_debt[s_]secured T _by[a_]_lien[s_]oncommunityproperty.Petitioner'sseparateestatehas r expendedfundsorassetsforpaymentof[that/those]_debt[s_].Those  expenditureshaveresultedinthereductionoftheprincipalof  [that/those]_debt[s_],givingrisetoaclaimforeconomiccontributionin  favorofPetitioner'sseparateestateandagainstthecommunity : estate.PetitionerrequeststheCourttograntPetitioner'sclaimfor X economiccontributionand,ifnecessary,imposeanequitablelienon &v thecommunityestatetosecuretheclaim. D AND/OR    Respondentisorwasobligated_on[a_]_debt[s_]secured_by[a_] !  _lien[s_]onpropertyclaimedbyRespondentasseparateproperty. "* Petitioner'sseparateestatehasexpendedfundsorassetsfor #H paymentof[that/those]_debt[s_].Thoseexpenditureshaveresultedin %f  thereductionoftheprincipalof[that/those]_debt[s_],givingrisetoa 4&! claimforeconomiccontributioninfavorofPetitioner'sseparateestate R'" andagainstRespondent'sseparateestate.Petitionerrequeststhe p(#  CourttograntPetitioner'sclaimforeconomiccontributionand,if )$! necessary,imposeanequitablelienontheRespondent'sseparate *%" estateoranyotherpropertyawardedtoRespondenttosecurethe +'# claim. ,8($ ЇDECREELANGUAGE  LienforClaimforEconomicContribution <   ITISORDEREDANDDECREEDthat[husband'stitle]pay  Z $______to[wife'stitle]foreconomiccontributionof[wife'stitle]'s ( x separateestatetothecommunityestate.Theclaimshallbear F  interestat______percentperyearandshallbepayableasfollows: d  ______.ITISORDEREDANDDECREEDthatanequitableliento   securetheclaimforeconomiccontributionisimposedinfavorof   [wife]against______[theentiretyofthepropertyof[husband'stitle]'s   separateestateawardedto[husband]]. ,    Tofurtherevidencetheclaim,[husband'stitle]isORDEREDto J  signanotepayableto[wife'stitle]intheamountoftheclaimspecified h  aboveandpayableaccordingtothetermsspecifiedabove. 6    [husband'stitle]isfurtherORDEREDtosign______tosecure T paymentoftheclaim. r   Thisclaimispartofthedivisionofcommunitypropertybetween  thepartiesandshallnotconstituteorbeinterpretedtobeanyformof  spousalsupport,alimony,orchildsupport.    X #D9Df?#;DD;X X;DTHISISWHATAJURYCHARGEMIGHTLOOKLIKEONASIMPLEECONOMIC  CONTRIBUTIONISSUEFORMORTGAGEPAYMENTSAFTERMARRIAGE.THE  BELOWLANGUAGEISTAKENFROMTHETEXASPATTERNJURYCHARGES.#X XX;X Z#<X XXX  | @>>& NO.2004  H *p=> d dhh(#(#p,dd ,Xdd",dd +  1' j j 1 INTHEMATTEROF ' j '  ' j" ' INTHEDISTRICTCOURT ?5 j  ? THEMARRIAGEOF ' V  '  ' V " ' ?5 V  ? ' B  '  ' B" ' ?5 B ? WIFE ' . '  ' ." ' 33RDJUDICIALDISTRICT ?5 . ? AND '   '  '  " ' ?5   ? HUSBAND '  '  ' " ' BURNETCOUNTY,TEXAS -#!   -  Texaslawrecognizesthreeestates:thecommunitypropertyownedbythe n  spousestogether;theseparatepropertyownedindividuallybythehusband;andthe T  separatepropertyownedindividuallybythewife. :   Aspousemuchprovebyclearandconvincingevidencethatfundsexpended V weretheseparatepropertyofthatspouse."Clearandconvincingevidence"isthat < measureordegreeofproofthatproducesafirmbelieforconvictionthattheallegations "  soughttobeestablishedaretrue. !   "Fairmarketvalue"meanstheamountthatwouldbepaidincashbyawilling # buyerwhodesirestobuy,butisnotrequiredtobuy,toawillingsellerwhodesiresto j$ sell,butisundernonecessityofselling. P%   InansweringQuestions򀀀,donotconsiderexpendituresforordinary l' maintenanceandrepair,expendituresfortaxes,interest,orinsurance,orthe R( contributionbyaspouseoftime,toil,talent,oreffortduringthemarriage. 8)   TheprincipalamountofadebtreferredtoinQuestions򀀀maybe  + reducedbypaymentontheprincipalofthedebtandbyrefinancing,totheextentthe !, refinancingreducestheprincipalamountinthemannerdescribedinthequestion. "- QUESTION򀀀 L$/   WithrespecttoTHEHOUSE,stateindollarstheamountofeachofthefollowing &h!1 onDATEOFDIVORCE: &N"2 *?@ dddd Xdd"Xdd =>(#(#,XdT ,hdT , dT +  1'($4($ Pd011.  .)~$5 thefairmarketvalue  .)~$6 Answer:$""J".)~$7 P *AB ddXdT XhdT h dT ?@(#(#,XdT ,hdT , dT +  1'*+z&8*+z& Pd012.  +&9 theprincipalamountofMORTGAGE  +&: Answer:$""J"+&; P   IfinanswertoQuestion򀀀youhavefoundthatthefairmarketvalueisless -(< thanorequaltotheprincipalamountofdebt,donotanswerthefollowingquestions.  Otherwise,answerthefollowingquestions.  QUESTION򀀀 b   WithrespecttoTHEHOUSE,stateindollarstheamountofeachofthefollowing . ~ onDATEOFFIRSTCONTRIBUTION:  d *CD ddXdT XhdT h dT AB(#(#,XdT ,hdT , dT +  1' 0 0 Pd011.  D   thefairmarketvalue  D   Answer:$""J"D   P *EF ddXdT XhdT h dT CD(#(#,XdT ,hdT , dT +  1'@ @  Pd012.    theprincipalamountofMORTGAGE    Answer:$""J"  P QUESTION򀀀     WithrespecttoTHEHOUSE,stateindollarstheamount,ifany,ofthereduction l  oftheprincipalamountofMORTGAGE,totheextentthedebtexistedatthetimeof R marriage 8 *GH ddXdT XhdT h dT EF(#(#,XdT ,hdT , dT +  1'TT Pd011.  h bythecommunityestate  h Answer:$""J"h P #X XX<X ][##DXX 1Z#9DD  ~ #D9Dks#9DD#D9Ds# DDWHATHASBEENLEFTOUTOFTHISARTICLE?  < Lotsofstuff.Thisarticleistohelpyourecognizewhenaneconomic d contributionissuearisesinyourprobateordivorce,anddoabasic 2  calculation.Ifyouthinkyouhaveaneconomiccontributionissue,you P  willneedtohitthebooks.Iftherewascreditcarddebtusedto n  improvethepropertybutnoM&Mlien,iftherewasalotof sweat   equitybutnotmuchcashputintotheimprovements,orifthehome   equitywastopayforcollege,morereadingwillberequired.Ifthe   communityismakingtheclaim,theburdenofproofispreponderance 6  oftheevidence.#DD t#DDIftheseparateestateofoneofthespousesis T  makingtheclaim,itwouldhavetobebyclearandconvincing "r  evidence._#DDiw#_