Highlights 77th Texas Legislature - Senate

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JURISPRUDENCE
77 th Texas Legislature
Economic Contributions by One Marital Estate to the Benefit of Another - H.B. 1245
by Representative Goodman
Senate Sponsor: Senator Harris
The 76 th Legislature enacted law providing that when, during a marriage, the value of one spouse’s
separate property is enhanced because of a financial contribution made with community property, or if
community property is used to discharge a debt on the separate property, this creates an equitable interest
on behalf of the community estate in the separate property, and provided formulas for determining the
amount of such interest. This bill seeks to clarify these provisions and the differences regarding
reimbursements and economic contributions by substantially amending the existing provisions.
Provides that a marital estate which makes an economic contribution to property owned by another marital
estate has a claim for economic contribution against the benefited estate in an amount equal to the product
of the equity in the benefited property on the date of dissolution of the marriage, the death of a spouse, or
disposition of the property, multiplied by a fraction of which the numerator is the economic contribution to
the property by the contributing estate and the denominator is an amount equal to the sum of:
• the economic contribution to the property by the contributing estate;
• the equity in the property as of the date of the marriage or, if later, the date of the first economic
contribution by the contributing estate; and
• the economic contribution to the property by the benefited estate during the marriage.
Provides that the amount of a claim may be less than the total of the economic contributions made by the
contributing estate, but may not cause the contributing estate to owe funds to the benefited estate. Also, a
claim may not exceed the equity in the property on the date of dissolution of the marriage, the death of a
spouse, or disposition of the property.
Provides that the use and enjoyment of property during a marriage does not offset a claim for economic
contribution to the property.
Clarifies that these provisions do not affect the rule of inception of title (the character of property is
determined at the time the right to the property arises).
Provides that these provisions do not affect the right to manage, control, or dispose of martial property.
Provides that a claim for economic contribution does not create an ownership interest in the property, but
does create a claim against that property which matures on the dissolution of the marriage or the death of
either spouse.
Requires a court, upon an application for a claim of economic contribution following the death of a spouse,
to impose an equitable lien on the benefiting marital property to secure a claim for economic contribution by
a contributing marital estate. Subject to homestead restrictions, this lien may be imposed on the entirety of
a spouse’s property, not just that property that benefited from an economic contribution.
Requires a court to offset competing claims for economic contribution by marital estates against each other.
Senate Research Center 197