Reimbursements Between Marital Estates: Traditional Dichotomy Between Reimbursement of Capital Improvements and Purchase Money Debts Disregarded: Penick v. Penick, 32 Tex. Sup. Ct. J. 143 (Dec. 14, 1988)

During the divorce of the Penicks, Robert argued that the community estate had received tax benefits in the form of depreciation on his separate property that exceeded the agreed upon $104,500 reduction in his separate property debt. The trial court found that the tax benefits received by the community estate exceeded what was paid out by the community estate on Robert’s separate property debt and that the community estate was not entitled to a reimbursement from Robert’s separate estate. The Texas Supreme Court affirmed the trial court judgment and in effect eliminated the long-standing difference between the measurement of reimbursement claims for reduction of purchase money debt and those for capital improvements, and gave the trial court broad discretion in determining the value of claims for reimbursement. The case provides an opportunity to discuss the history and state of reimbursement of marital estates in Texas.