1-281-DIVORCE (348-6723)


1-281-DIVORCE (348-6723)

Fraud & Waste against the community estate in a Texas Divorce

When you dissolve a marriage claims can be made for fraud and waste and then also for breach of fiduciary duty that one spouse would owe another spouse.

I generally start with a definition of community property to give an overall understanding of the property concepts and the offsets that can be made based on and unfair disposition.

 Community property is property owned or acquired during the marriage.

Separate property is  property owned prior to the marriage or received during the marriage by gift , by devise, or descent.

Everything is presumed to be community property upon dissolution and must be traced by clear and convincing evidence to show that its separate property.

  • Examples of separate property would be, a house owned prior to the marriage, now the  rental income of a house which you own prior to the marriage that you perhaps rented out would be considered as community property.
  • An exception to this would be, if you have oil and gas royalties that is a depreciating asset as the corpus depreciates than that is considered separate property.

Family Law

Fraud & Waste in a Texas Divorce

At the same time if you are in some type of accident and you have a tort claim against someone, tort claims for pain and suffering are considered separate property but to the extent for loss income and wages that is considered community property and can be partitioned upon a divorce.

Many times at the end the marriage there are transactions that take place because one spouse is cheating or one spouse hiding assets.

There’s 3 general characterizations

There’s 3 general characterizations that you look at and bring in the causes of action.

One is the fiduciary duty that each party would have towards each other and therefor if you have a fiduciary duty you must for large purchases and for major transactions consult and confer with your spouse.

Two types of fraud

Then you have two types of fraud (actual fraud and constructive fraud) constructive fraud maybe the spouse who goes to Louisiana and gambles frequently vs the spouse who stays at home and goes to church every Wednesday and Sunday and donates very little to the church but otherwise is a low maintenance spouse and when you have spouse with certain types of vices than that is something that the court can look at as far the unfair disposition of money that were spent on those vices.

Actual fraud is the transferring of property,  the depletion of an account, and then transferring overseas to another family member or moving property, transferring titles of properties to other members of the family and saying you sold it for fair market value.

Then finally we have waste. Waste and constructive fraud are similar and they are many times used interchangeably.

With the waste claim this is best characterized the lover of the husband and those dinners, vacations, hotel rooms that are being paid for by the husband for the most part with women its going to be money that is sent to her family perhaps overseas.

I had a Chinese couple where the husband was from Mainland China and the wife was from Taiwan and the wife had sent $200,000 to buy her family a house in Taiwan for which the husband did not consent.

The husband had a son from a previous marriage for which he paid that son allowance every month while that son was in college which the wife did not approve, so each party had offsetting waste claims against the other of course the husband had the lesser claim because he had spent approximately $36,000 on his son and then the wife had spent well over $200,000 she had sent overseas.

So, in the dissolution context the remedy at the end of the marriage when you have a waste claim a fraud claim is to reconstitute the estate so for the most part you need to trace these items out and you need to show specifically where the transaction took place.

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Michael Busby is a Houston divorce lawyer who has been in practice for over 20 years and appears daily in the Family Law Courts of Harris County and Fort Bend County Texas

Busby & Associates , have two Houston Offices, one in Chinatown, Houston Texas and another in Independent Heights, Houston, Texas. Michael Busby is Board Certified in Family law by the Texas Board of Legal Specialization.