Watts-Epstein Credits is so namd after the two appellate cases that defined the general rule that courts must reimburse one spouse who is using earnings or other separate property fund after separation to pay pre-existing community estate obligations.
Let’s say you are living in the house after your spouse leaves. You are paying the mortgage and all the household bills and maintenance yourself. Under Watts, when one party moves out the earning of each become strictly separate property. The person in the house is paying the bills with separate property, but, in doing so, enriches the community with his or her separate property. The home-dweller is “renting” the home from the community and must pay the fair rental amount, at the same time “setting off” that rental with any mortagage or maintenance payments made with their separate property.
Watts is a calculation for the value of what should be charged for an exclusive enjoyment of community property by one spouse; Jeffries combines the value of that use with reimbursements under an Epstein analysis. Marriage of Watts (1985) 171 Cal.App.3d 366, 373-374; Marriage of Jeffries (1991) 228 Cal.App. 3d 548, 552-553; Marriage of Epstein (1970) 83 Cal.App.3d 55
Epstein added a reimbursement to the community for community funds used by a party to pay their separate debts, or even their “rental” of the community home if they stayed in the home after separation.
Watts and Epstein go together because one gives a spouse who is spending their separate property (salary after separation) to pay a community debt (the mortgage) with a complimentary right when a spouse uses community funds after separation to pay for their own separate debts.
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