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Watts Charges and Epstein Credits are one reason not to delay your divorce proceedings any longer than necessary. In California, the community exists from the date of marriage until the date that the parties begin living separate and apart. The date that parties commence living separate and apart is referred to as the “date of separation.” Determining the date of separation is a topic worthy of its own post, but for our purposes, let’s keep it simple and define the date of separation as the date that one of you has decided the marriage is over and engaged in conduct that would communicate to third parties that the marriage was over. As of the date of separation, all monies earned are the earning spouse’s separate property. Property and other assets purchased during the marriage; however, remain community after the date of separation.

Of course, community property bills like the mortgage or car payment don’t cease to be due just because the community has ended. Nor do community assets cease to be lived in or driven after the date of separation and until the parties finalize a division of assets and debts. To make sure you get your fair share during that interim period, we have Watts Charges and Epstein credits.

Watts Charges are the legal term for a spouse’s right to ask for rental value for the use of a community property asset after date of separation. They typically arise when one party exclusively lives in the community property family home after the parties’ date of separation. However, it can be applied to any community asset that one party uses post separation—think cars, vacation rentals, four wheelers just to name a few items that might create a claim for Watts Charges.

Epstein credits are the legal term for a spouse’s right to receive a reimbursement for separate money used to pay off a community property debt after the date of separation has been established.  Community debts such as the mortgage, car payments, credit card payments can all credit claims for Epstein Credits.

Watts Charges and Epstein credits are not absolute. A judge can decide in her discretion that the facts of a particular case do not support ordering Watts Charges or Epstein Credits.  Examples of this are when the payments are being made prior to the establishment of a spousal or child support order or when the asset being used is underwater and therefore the charge or credit can not be taken out from the proceeds of the sale.

Like most matters handled in divorce court, Epstein credits and Watts Charges can be waived. Often in mediation they are. However, knowing the approximate value of a claim is often useful in mediation to help the parties see why a settlement offer is fair or even generous. Working with an attorney mediator, you and your spouse can use a single legal professional to guide you through the calculation rather than hiring two attorneys to battle over the numbers. Once a tentative agreement is reached, then you can have independent counsel review the numbers with you thereby saving you substantial money in attorneys’ fees because you are avoiding the back and forth between two opposing attorneys. Mediation with an attorney mediator provides the best of opportunity to evaluate legal issues in an atmosphere that approaches conflict looking for compromise rather than a winner takes all mindset.

If you would prefer to calculate those Watts Charges and Epstein credits for less, then I recommend setting up your free call with Amanda Jarratt today.

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