What Are Epstein Credits, And How Did Dan Broderick Use Them In His Divorce From Betty Broderick?

Daniel and Betty Broderick had once lovingly said “I do” as they dreamed of wedded bliss, a large family, and many financial successes.

But after 16 years of marriage, the romance between the couple soured, leading to a long, brutal, and extraordinary divorce battle in the California court system.

By then, Dan was a well-regarded medical malpractice attorney — having earned both his medical and law degrees at some of the nation’s most prestigious universities.

His wife, Betty, was finally enjoying the benefits of her husband’s wealth and success after years of supporting him through school, according to the book “Until the Twelfth of Never” by Bella Stumbo. As a stay-at-home mom, the former teacher took pride in raising the couple’s four children and was an active part of the San Diego social scene.

The marriage would crumble, however, after Dan began having an affair with his 22-year-old legal assistant, Linda Kolkena, and filed for divorce in September of 1985.

The divorce and settlement battle between the couple would continue for years as Betty struggled to maintain consistent legal counsel — by some accounts due to her own doing.

After Dan’s lawyer obtained an emergency court order to sell the couple’s home against Betty’s wishes, she tried to ram her car through the front door of Dan’s new house, the San Diego Reader reported in 1989.

She was later sentenced to a short stint in jail after repeatedly harassing Dan — leaving vulgar messages on his home answering machine and vandalizing his property. Although the divorce was official in 1986, the legal battle to reach a financial and custody settlement continued for years until a judge handed down his final decision.

The 1989 ruling — and Dan’s use of Epstein credits to significantly reduce her final financial settlement — enraged Betty, who believed it prevented her from getting her fair share of the couple’s wealth, according to Stumbo’s book.

Dan's legal maneuvering was also depicted in the USA series "Dirty John: The Betty Broderick Story," during which Dan (played by Christian Slater) asks his friend for advice on using Epstein credits before separating from Betty (portrayed by Amanda Peet).

Photo: Isabella Vosmikova/USA Network

Fueled by her anger over the affair, the demise of the marriage, and what Betty believed was Dan’s “overt emotional terrorism” in the years that followed their separation, Betty would sneak into Dan’s home later that year and shoot Dan and his new wife Linda to death while they slept in their bed, reported The Los Angeles Times in 1989.

But just what are Epstein credits, and what role did they play in the dramatic divorce proceedings?

Myra Chack Fleischer, lead counsel and founder of the law firm Fleischer & Ravreby, told Oxygen.com that in the state of California, debts or expenses that occur during a marriage are considered community expenses.

But after a couple separates, income or debt earned after the date of separation is attributed to the individual.

Couples often, however, may still own joint property or have community debts that need to be repaid. If one party uses their own individual earnings to pay a community debt before the divorce proceedings conclude, Fleisher said they could later be eligible for a form of reimbursement known as an Epstein credit.

For example, if a couple has outstanding debt of $100,000 during their marriage, and one party pays off that debt after the couple separates, the person who paid off the debt using their own resources may be eligible for reimbursement of $50,000 from the other party and may therefore get a financial settlement that is $50,000 higher.

“An Epstein credit says, well, when we finally get around to dividing your community assets, we will give credit to the person who used their separate funds to pay a community debt to divide the community assets,” Scott Altman, professor of law at the USC Gould School of Law, told Oxygen.com.

Dividing community assets between a couple is typically fairly straightforward if the divorce process proceeds quickly.

“If you get a divorce pretty quickly, the earnings during marriage will get divided equally, and the earnings after your separation will go to your earner,” Altman said. “A lot of complication arises if there is a delay in the divorce.”

In the Broderick divorce, the battle between Betty and Dan continued for years as Dan continued to make payments on debts the couple had incurred during their marriage.

“What happened in that case, and what happens in a lot of cases, is one spouse is paying the debts that happened before the date of separation for a really long time, so there’s a requirement or a request by one spouse to have reimbursement,” Fleischer said.

In court, Betty accused Dan of “deliberately dragging out payments and encumbering properties in order to increase her Epstein debt to him,” Stumbo wrote in her book.

In her final arguments, Betty — who was representing herself at the time — asked the court for $25,000 in spousal support each month for 10 years and a $1 million cash settlement.

Dan, however, denied having a preconceived plot in terms of the credits and said he had never even heard of Epstein credits until he began the divorce.

His attorneys suggested he pay $9,000 in spousal support for a year and then $5,000 each month for a few years after that. They believed the judge should accept all the Epstein credits Dan had claimed.

The judge would ultimately decide with Dan, agreeing that Betty owed nearly $750,000 in Epstein credits and cash advances to Dan, according to “The Until the Twelfth of Never.” The figure included reimbursement for half of Dan’s student loan payments after his attorneys argued that his Harvard degree had “enhanced” the couple’s community wealth.

After the couple’s community assets were calculated — including Dan’s successful law practice — and the $750,000 in Epstein credits were subtracted from Betty’s share, Dan owed her just over $33,000.

The judge cut that figure by an additional $5,000 due to outstanding legal fees, leaving Betty with just over $28,000. Dan was also ordered to pay her $16,000 a month in spousal support.

“[Betty] drove home with a screaming mind,” Stumbo wrote. “Not $1 million. Not even half a million. $28,000. A joke, an insult, an outrage.”

Fleischer told Oxygen.com that Epstein credits are “definitely used on a regular basis” in divorce proceedings in California.

But while Betty and Dan’s divorce played out in a courtroom, Fleischer said about 80 percent of the cases she handles settle before ever going to trial.

The amount of Epstein credits, if any, a person receives can be a part of the negotiating process in settlement discussions. She estimated that about “80 to 90 percent of the time,” the credits are waived or reduced as part of the effort to reach an agreement between the parties “unless they are an extraordinary amount.”

A judge can also order Epstein credits to be paid, but it may ultimately be more costly to go to trial rather than settle out of court.

“It may cost you more than the credits that you are getting, depending on what you paid off,” she said.

Fleischer described the Broderick divorce as “unusual” and said she has rarely ever seen Epstein credits have such a significant impact on the overall financial outcome.

“That was an extraordinary case. That case was really bitter,” she said. “It went on for a really long time, and there were a lot of credits that were involved. And those credits really amassed her half.”

Altman wasn’t familiar with the specifics of the Broderick divorce, but said people are often “shocked” to learn that they are responsible for jointly paying off debt, even if it was debt that the other party incurred during the marriage.

For example, if a spouse is unaware that their partner is spending lavishly on a credit card, they may still be held responsible for that debt if they divorce.

“It doesn’t matter if it immediately benefits you, or you know about it. If it was a debt that was incurred during marriage, it’s a community debt for which you are both jointly responsible,” he said.

Both Altman and Fleischer agreed that Betty could have benefited from having legal counsel represent her during trial.

“It’s a serious and ongoing problem in divorces that when one spouse has all of the income, and you get a divorce, often that spouse ends up better represented in the divorce,” Altman said. “There are some mechanisms now that will allow the lower earning or non-earning spouse to borrow against community assets to pay lawyers and so sometimes that will enable a spouse without any income of their own to finance a legal defense by borrowing against, for example, a community property house if there is one.”

Betty did seek the legal counsel of multiple lawyers — but she struggled to maintain consistent representation.

Betty claimed at the time that it was difficult for her to enlist any of San Diego’s top family-law specialists because of Dan’s own connections within the legal community, according to the San Diego Reader.

She was able to secure representation by a series of attorneys, but the relationship always ended for one reason or another. For example, she said Daniel Jaffe of Beverly Hills stopped representing her after Dan wouldn’t honor his promise to pay the retainer.

Jaffe, however, disputed that account to the San Diego Reader in 1989.

Betty’s lack of legal counsel may have put her at a disadvantage in the courtroom.

“The thing that stuck out about the case to me, it was a very drawn-out case. I think ... the length of time and her failure to have consistent legal counsel ... is what got her into trouble with these Epstein credits,” Fleischer said.

Fleischer said it's possible that none of the attorneys looked into the full impact the credits because they were “always coming up to speed” in the case. It's also plausible that somebody may have discussed it with Betty, but she might just not have listened, according to Fleischer.

“We don’t know what happened behind the scenes,” she said.

Betty remains in prison today after receiving a sentence of 32 years to life for the murder of Dan and Linda Broderick.