A right to reimbursement, what does that really mean in a divorce?

This blog article briefly explains what a right to reimbursement is and what it can mean in a divorce.

What is a right to reimbursement?

The term “right to reimbursement” refers to the right a spouse may have to receive compensation for certain investments or contributions he or she has made to the other spouse’s assets.

When one spouse has contributed own assets or made improvements to assets belonging to the other spouse, a right to reimbursement may arise.

There are several situations in which a right to reimbursement can arise, such as:

• Contribution of own assets to common property: for example, if one spouse used his or her own money to buy a joint house, a right to reimbursement may arise for the amount contributed.
• Financing remodelling or renovations: if a spouse has spent money on improving common property, such as renovating a house, a right to reimbursement may arise based on the increase in value resulting from those improvements.
• Repayment of debts with own assets: if a spouse has used his or her own money to repay debts of common property, a right to reimbursement may arise.

A right to reimbursement can lead to a financial claim on the other spouse’s assets. This may be important in divorce cases, which involve the division of assets.

Type of right to reimbursement

In prenuptial agreements, different arrangements can be made regarding the right to reimbursement. For example, nominal compensation or value development doctrine can be chosen. If no choice has been made this regard, the value development doctrine applies since the 1st of January 2012.

Nominal compensation

Nominal compensation means that a spouse who contributes own assets to common property is entitled to compensation equal to the amount of his or her contribution (adjusted for inflation or changes in value over time). In other words, the owner of the contributed own assets is entitled to be repaid the original amount, without taking into account any profit or return the invested assets may have generated.

Value development doctrine

Under the value development doctrine, a spouse who contributed his or her own assets to common property is entitled to compensation equal to the amount of the contribution plus a proportionate share of the increase or decrease in value that the common property has undergone. In other words, the owner of the contributed asset is entitled to a share of the increase in value of the asset because his or her contribution contributed to that increase in value.

Conclusion

In short, nominal compensation does not take into account increases in value or decreases in value of an asset, while the value development doctrine does take increases or decreases in value into account. Since the 1st of January 2012, the law states that the value development doctrine applies, although it is possible to deviate from this in prenuptial agreements.

More information

Be well informed before investing in your spouse’s assets or vice versa. My colleagues and I will be happy to help you clarify any right to reimbursement during your divorce. Would you like more information on the right to reimbursement or have another legal question? Please do not hesitate to contact us.