Q. My husband completed his training as a doctor after we married. He incurred substantial educational loans which we paid off during the marriage. What rights to I have for recovering those costs?
A. The community estate is supposed to be reimbursed for community contributions to education or training
of a spouse that substantially enhances that person's earning capacity. The amount reimbursed must include interest at the legal rate, accruing from the end of the calendar year in which the contributions were made. [FC §2641(b)(1); see FC §2627.]
Reimbursement is not appropriate in the following circumstances:
- The parties expressly agreed in writing to the contrary [FC §2641(e)]; or
- The contributions were for ordinary living expenses that would be incurred regardless of whether the spouse attended school, stayed home, or worked [Marriage of Watt (1989) 214 CA3d 340, 354].
If the loan is still outstanding at the time of dissolution, the balance is not divided but is instead assigned to the party who was educated or trained, except when the parties expressly agreed in writing to the contrary. [FC §2641(b)(2) (e).]
Nonetheless, the Court may reduce or modify the reimbursement and assignment of educational loans to the extent circumstances render such a disposition unjust, including the following [FC §2641(c)]:
- When the community substantially benefited from the education, training, or loan incurred for the education or training of the party. There is a rebuttable presumption affecting the burden of proof that the community has not substantially benefited from community contributions to the education or training made fewer than 10 years before the commencement of the proceeding. On the other hand, it is presumed that the community substantially benefited from community contributions to the education or training made more than 10 years before the commencement of the proceeding.
- 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.
- 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.
Professional licenses and education are not "property" that can be divided in divorce or legal separation in California. Reimbursement for community contributions and assignment of loans under FC §2641 is the exclusive remedy of the community or a party for education or training costs and any resulting enhancement of a person's earning capacity.
However, importantly, the Court should consider the effect of the education, training, or enhancement, or the amount reimbursed, on the circumstances of the parties in ordering permanent spousal support pursuant to Family Code section 4320(b). [FC §2641(d).]
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