Waste of Community Assets in Divorce

If you are married, any property that you and your spouse acquire during the marriage is considered part of your “community” estate. In the event of divorce, a Galveston judge will divide a couple’s community property in a manner that is “just and right.” This does not necessarily mean a 50/50 split. If one spouse has engaged in reckless spending without the other’s knowledge, the judge may consider such a “waste of community assets” as a factor supporting the award of a greater share to the innocent spouse.

Husband Penalized for Failing to Explain Spending Over $800,000

A recent Texas divorce case helps illustrate this point. The couple in this case were married for approximately 36 years. The husband left the marital home and moved in with another woman. During this time he withdrew more than $700,000 from his retirement account.

When questioned in court, the husband could not account for all the money he spent. An accountant retained by the wife determined the husband spent about $800,000 in marital assets during their separation, of which about $700,000 could not be traced. The husband, who represented himself at trial, neither challenged the accountant’s findings nor offered any rebuttal financial evidence of his own.

The divorce court ultimately favored the wife when making a final property division. The judge found the husband “wasted community assets in the amount of approximately $800,000,” and charged that amount against him “as if the estate was reconstituted to include the funds that were wasted.” The husband appealed the judge’s order, but a Texas appeals court affirmed the decision.

The appeals court noted that a “fiduciary duty exists between a husband and a wife as to the community property controlled by each spouse.” While not “fraud” in the criminal sense, “fraud on the community” nevertheless has “all of the consequences and legal effects of actual fraud because it tends to deceive the other spouse or violates confidences that exist as a result of the marriage.” So in the context of this case, the husband’s unaccounted wasteful spending was “fraud” against the wife.

Indeed, anytime one spouse spends or dissipates marital property without the knowledge or consent of the other, there is a “presumption of waste” under Texas law. The disposing spouse therefore has the burden to prove his actions were not fraudulent or wasteful. Here, the husband not only admitted to withdrawing $700,000 from his retirement accounts–which were indisputably community property–but he neglected to challenge the findings of the wife’s accountant. This was sufficient, the appeals court said, to support the “presumption of waste” against the husband.

Get Advice From a Galveston Divorce Attorney

Do not assume that just because you are getting a divorce, you are free to withdraw funds from accounts you jointly hold from your spouse. And never try to represent yourself in divorce court, especially if the other spouse has accused you of financial misconduct. You should always work with a qualified Galveston divorce lawyer who can advise you on how to properly deal with your finances. Call the Law Offices of Tad Nelson & Associates at (281) 280-0100 if you are in the process of going through a divorce and need advice today.