What Happens in Divorce with Fraud or Marital Waste?

Under Texas divorce law, marital property is divided in a manner deemed “just and right” when considering the rights of each party and the children of the marriage. The parties to a divorce may disagree with what is just and right, but that is the guiding principle used to determine how property should be divided.

So how does Texas law handle situations where one or both spouses take actions designed to keep money away from the other? 

Fraud on the Community

Marital waste is known as “fraud on the community” in Texas courts. If one party has committed fraud on the community, the court will divide assets based on a “reconstituted estate.” Once the court has determined that fraud occurred it will:

  • Determine how much the community estate was reduced ed based on the fraud
  • Add that amount back to determine the value of the reconstituted estate
  • Divide the value of the reconstituted estate according to what is just and right

Basically, the court creates an imaginary estate that would have existed if the fraud had never occurred and then divides it. 

Deterring Marital Waste

The court can take additional steps in cases of marital waste. The law allows courts to award legal or equitable relief in cases of fraud in the effort to make sure the outcome is right and just. That means courts can do the following:

  • Give the wronged spouse more of the community estate left over after the fraud
  • Award the wronged spouse a money judgement
  • Award both a money judgment and a larger share of the community estate

By awarding a larger share of the marital assets and potentially a money judgment, the courts can ensure that the party committing the fraud does not benefit from the attempt.

Constructive Fraud and Actual Fraud

There are two types of fraud in the community to consider in divorce. Constructive fraud involves one spouse spending money or using assets for non-community purposes without the other spouse’s knowledge or consent. This can take many forms, including: 

  • Vacations taken by one spouse without the other
  • Money used for extramarital affairs
  • Gambling, buying drugs, or spending money on the other illicit activities
  • Spending un-reasonable amounts on business or work ventures
  • Other spending that solely benefits one party

Actual fraud requires more evidence, but it often involves transferring money from the community to a hidden account or to a third party with the intent to deceive the other spouse about the size of the community estate. 

Contact the Fort Worth, Texas, Attorneys at Schneider Law Firm, P.C.

Divorce can be a contentious and painful experience. If marital waste is an issue in your divorce, it is vital to speak to an experienced divorce lawyer as soon as possible. Call Fort Worth, TX, legal team at 817-755-1852 or send us a message to get started on your divorce case.

Family Law