Divorce Lawyer Analysis: Improving Community Property with Separate Property in Louisiana

This article goes over some of the community property laws a divorce lawyer may apply when separate property of a spouse is used for a community asset.  But, first an example:

Let’s say that Steve and Sarah are married.  Five years into their marriage they bought a small propeller plane together.  Both Steve and Sarah absolutely love to fly, and together they clock many hours soaring through the skies over Baton Rouge.  For the purposes of this example, let’s say that Steve and Sarah purchase the plane with monies from their joint savings account; and the monies there in are an accumulation of paychecks they have received from their respective employment.

Five years after the plane is purchased, something goes wrong with it.  To fix the problem, it is going to cost fifty thousand dollars.  This comes as bad news to the couple, because they do not have that kind of money.  However, a few months later, Sarah’s father dies.  In his will, Sarah’s father leaves her exactly fifty thousand dollars.  Without skipping a beat, Sarah uses the money to fix the plane.  She and Steve are happy once more, because they can continue flying.

Now let’s say four years later one of the parties decides to end the marriage and hire a divorce lawyer.  They engage the help of family attorneys, because they are disputing how to divide up their property.  One issue they have is the fifty thousand dollars Sarah spent to improve the aircraft.

Under Louisiana Civil Code article 2367, separate property used by one spouse to improve community property may be partially reimbursed by the other spouse upon an end to the marriage.  Specifically, the other spouse needs to pay fifty percent of the value of the separate property used at the time it was used.  Article 2367 also says that the spouse who is reimbursing the other spouse for using their separate property must pay fifty percent of the value of that separate property up to the amount remaining of their half of the community property.  Knowing that, let’s turn back to Steve and Sarah.

Let’s say that, after each pays for their divorce lawyer, Steve and Sarah are pretty much broke.  They have a lot of debt, both community debt and separate debt.  After everything has been divided, it turns out that their community property regime is worth in total only forty thousand dollars.  This means that each will get exactly half, or twenty thousand dollars.  However, remember that Steve is supposed to reimburse Sarah for the separate property she used to improve the community property.  Here, the inheritance is separate property (under Louisiana law inheritances to one spouse are considered separate property) and the plane is probably going to be considered community property (because both spouses purchased it during the course of their marriage with community funds.)

So then, Steve owes Sarah half of the fifty thousand dollars she spent to improve the plane, or twenty five thousand.  However, his half of the community property is only twenty thousand dollars.  This means that while he will have to forfeit his half of the community property to satisfy the debt to Sarah, Louisiana law will probably not make him pay the additional five thousand dollars.

Will Beaumont is a divorce lawyer in New Orleans.  This article is purely informational and not legal advice.  If you have a question, contact an attorney for more information.