The Texas Legislature repealed the economic contribution statute, which has been a bane to Texas Family Law Attorneys since it was originally passed.  Instead, Senate Bill 866 replaces economic contribution with a system of reimbursement and offset based on equitable principles.  Further, it clarifies that the party seeking the offset has the burden of proof. 

Click here to see the text of SB 866.  This law is effective on September 1, 2009 to any  newly filed case.

A claim for reimbursement under the new section 3.402 of the Texas Family Code includes:

  1. payment by one marital estate of the unsecured liabilities of another marital estate;
  2. inadequate compensation for the time, toil, talent, and effort of a spouse by a business entity under the control and direction of that spouse;
  3. the reduction of the principal amount of a debt secured by a lien on property owned before marriage, to the extent the debt existed at the time of marriage;
  4. the reduction of the principal amount of a debt secured by a lien on property received by a spouse by gift, devise, or descent during a marriage, to the extent the debt existed at the time the property was received;
  5. the reduction of the principal amount of that part of a debt, including a home equity loan:
    1. incurred during a marriage;
    2. secured by a lien on property; and
    3. incurred for the acquisition of, or for capital improvements to, property;
  6. the reduction of the principal amount of that part of a debt:
    1. incurred during a marriage;
    2. secured by a lien on property owned by a spouse;
    3. for which the creditor agreed to look for repayment solely to the separate marital estate of the spouse on whose property the lien attached; and
    4. incurred for the acquisition of, or for capital improvements to, property;
  7. the refinancing of the principal amount described by Subdivisions (3)-(6), to the extent the refinancing reduces that principal amount in a manner described by the applicable subdivision;
  8. capital improvements to property other than by incurring debt; and
  9. the reduction by the community property estate of an unsecured debt incurred by the separate estate of one of the spouses.

The new law further allows for offset of competing reimbursement claims against each other when appropriate.  Any benefit for the use and enjoyment of property may be offsent against a claim for reimbursement for expenditures to benefit a marital estate, except a separate estate of a spouse may not claim an offset for use and enjoyment of a primary or secondary residence owned wholly or partly by the separate estate against contributions made by the community estate to the separate estate.

Where funds are sought to be reimbursed for improvements to another marital estate, the court is to use the standard of enhancement of value.

 

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Photo of Michelle O'Neil Michelle O'Neil

Michelle May O’Neil has 27 years’ experience representing small business owners, professionals, and individuals in litigation related to family law matters such as divorce, child custody, and complex property division. Described by one lawyer as “a lethal combination of sweet-and-salty”, Ms. O’Neil exudes…

Michelle May O’Neil has 27 years’ experience representing small business owners, professionals, and individuals in litigation related to family law matters such as divorce, child custody, and complex property division. Described by one lawyer as “a lethal combination of sweet-and-salty”, Ms. O’Neil exudes genuine compassion for her client’s difficulties, yet she can be relentless when in pursuit of a client’s goals. One judge said of Ms. O’Neil, “She cannot be out-gunned, out-briefed, or out-lawyered!”

Family Law Specialist

Ms. O’Neil became a board-certified family law specialist by the Texas Board of Legal Specialization in 1997 and has maintained her certification since that time. While representing clients in litigation before the trial court is an important part of her practice, Ms. O’Neil also handles appellate matters in the trial court, courts of appeals and Texas Supreme Court. Lawyers frequently consult with Ms. O’Neil on their litigation cases about specialized legal issues requiring particularized attention both at the trial court and appellate levels. This gives her a unique perspective and depth of perception that benefits both her litigation and appellate clients.

Top Lawyers in Texas and America

Ms. O’Neil has been named to the list of Texas SuperLawyers for many years, 2011-2018, a peer-voted honor given to only about 5% of the lawyers in the state of Texas. In 2014-2018, Ms. O’Neil received the special honor of being named by Texas SuperLawyers as one of the Top 50 Women Lawyers in Texas, Top 100 Lawyers in Texas, and Top 100 Lawyers in DFW. She was named one of the Best Lawyers in America for 2016 and received an “A-V” peer review rating by Martindale-Hubbell Legal Directories for the highest quality legal ability and ethical standards.

Author and Speaker

A noted author, Ms. O’Neil released her second book Basics of Texas Divorce Law in November 2010, with a second edition released in 2013, and a third edition expected in 2015.  Her first book, All About Texas Law and Kids, was published in September 2009 by Texas Lawyer Press. In 2012, Ms. O’Neil co-authored the booklets What You Need To Know About Common Law Marriage In Texas and Social Study Evaluations.  The State Bar of Texas and other providers of continuing education for attorneys frequently enlist Ms. O’Neil to provide instruction to attorneys on topics of her expertise in the family law arena.