## Facts

- Elayne and Leon Epstein married in 1954 and separated on April 15, 1972; they had two children, including a minor son living with the wife.
- The husband, a psychiatrist, earned substantial post-separation income and paid pendente lite support to the wife while she and the minor child remained in the family residence.
- After separation, the husband used separate funds to pay carrying costs on the community residence (including mortgage-related and other expenses associated with preserving the property).
- The trial court ordered the family residence sold, directed that sale proceeds first reimburse the husband for specified post-separation expenditures on the residence, and then divided the remaining proceeds to equalize the community property division.
- The trial court declined to require the husband to reimburse the community for community funds he had used to pay estimated taxes on his post-separation separate income.
- The trial court set spousal support at $750 per month and ordered it to terminate on April 15, 1981.
- The wife appealed; the California Supreme Court granted review.

## Issues

1. Whether a spouse is entitled to reimbursement for separate funds used after separation to pay community obligations relating to a community asset, and what limits apply when such payments function as support.
2. Whether the court may account for capital gains tax consequences of a compelled sale of a community residence when equalizing the community property division.
3. Whether the community must be reimbursed when community funds are used to pay estimated income taxes attributable to a spouse’s post-separation separate income.
4. Whether a fixed future termination date for spousal support is permissible absent evidence the supported spouse will be self-supporting by that date.

## Decision

- The court held that the no-reimbursement rule for separate payments of community obligations during marriage does not govern post-separation payments; post-separation payments made from separate funds to preserve and maintain a community asset are generally reimbursable.
- The court limited reimbursement by excluding amounts that were paid to satisfy the paying spouse’s support obligations; it remanded for fact-finding on which payments were reimbursable versus support.
- The court interpreted the property-division order as permitting consideration of capital gains tax incurred by the sale so the division can be equalized after payment of that tax.
- The court held the trial court erred by not requiring reimbursement to the community for community funds used to pay estimated taxes on the husband’s post-separation separate income.
- The court upheld the amount of spousal support but reversed the fixed termination date because the record did not support a finding that the wife would be self-supporting by that date; it remanded for reconsideration consistent with governing support standards.

## Legal Principles

- After separation, a spouse who uses separate funds to pay preexisting community obligations associated with a community asset ordinarily has a claim for reimbursement, because the gift presumption applicable during marriage is weakened after separation.
- Reimbursement for post-separation payments is not allowed to the extent the payments constitute satisfaction of the paying spouse’s support duty (including payments effectively made in lieu of support).
- In equalizing a community property division following an ordered sale of a community asset, the court may consider actual tax liabilities (including capital gains tax) generated by the sale in determining an equal division after taxes.
- The community must be reimbursed when community funds are used to pay tax liabilities attributable to a spouse’s post-separation separate income.
- A court should not impose an automatic future termination date for spousal support in a long-duration marriage absent evidentiary support that the supported spouse will be self-supporting by the termination date.

## Conclusion

The court clarified that post-separation separate-property payments on community obligations are generally reimbursable unless they function as support, allowed consideration of sale-related capital gains taxes in equalizing distribution, required reimbursement to the community for taxes paid on separate post-separation income, and rejected an unsupported fixed termination date for spousal support, remanding for further proceedings.


In re Marriage of Epstein, 24 Cal. 3d 76, 154 Cal. Rptr. 413 (Cal. 1979)