Texas Divorce Attorney Blog
A spouse who improperly spends large amounts of community assets without the other spouse’s knowledge or consent may receive a smaller share of the remaining community estate during a Texas divorce. A Texas appeals court recently considered whether a property division was just and right after the trial court found the husband had committed fraud on the estate by spending money on other women.The wife filed for divorce after learning her husband had been unfaithful. The husband testified to having affairs for the past 30 years. He took the other women on trips and shopping sprees, paid their rent and car payments, and hired some of them and gave some of them money for their own start-ups. He paid for these things through his business accounts, company credit cards, and petty cash from his pharmacy.
The wife hired a CPA to provide an accounting of the husband’s businesses. The CPA rendered an opinion that more than $7 million was either missing or spent in transactions that did not benefit the community estate.
The husband rejected the amount identified by the wife’s CPA, claiming a large portion of the amount identified did not exist. His expert opined that the wife’s accountant had made conclusions based on insufficient data. The husband’s employee testified the husband never took petty cash. She also stated some of the transactions identified by the plaintiff’s accountant were not fraudulent because they benefited either the business or the community estate. The trial court found the husband was not a credible witness, spoliated evidence, and committed a fraud on the community of nearly $4 million.
The trial court divided the community estate. The parties agreed the wife would keep her ophthalmology practice, and the husband would keep his pharmacies and clinics. The court divided the rest of the estate with about 55% going to the wife and 45% going to the husband. The dollar value of the fraud on the estate was allocated to the husband as an asset, and it made up most of his net estate. With that amount removed, the division was approximately 88% to the wife and 12% to the husband.
The husband appealed. The division of community property must be just and right. The court may consider fault but should not use the division to punish. When a court finds fraud, it must determine the value taken from the community estate as a result and the amount of the reconstituted estate. The reconstituted estate is the value that the community estate would have had if not for the fraud. The court then must divide the reconstituted estate in a just and right way. The court can give the wronged spouse a disproportionate amount of the community assets, a money judgment, or both.
There is a presumption of fraud when a spouse disposes of the other spouse’s interest without their knowledge or consent. The presumption may even arise when the funds are not taken into account. The husband argued the court abused its discretion because there was insufficient evidence supporting its finding of fraud.
The appeals court considered each of the 11 categories of fraud identified by the wife’s CPA. After considering the expert’s evidence and the arguments and evidence presented by the husband in each category, the appeals court found there was sufficient evidence to support a finding that the husband committed a fraud of nearly $4.2 million. The trial court found a fraud of nearly $4 million, which was within the range of the evidence.
The husband argued the trial court had not considered factors that would have weighed in favor of his getting a larger share. The appeals court noted, however, that the trial court had also heard evidence weighing in favor of a disproportionate share to the wife. The appeals court found the husband had not overcome the presumption that the trial court acted properly within its discretion.
The appeals court found the trial court had sufficient information to exercise its discretion, and the division was not manifestly unjust and unfair. The appeals court affirmed the trial court’s order.
Property division can be very complex, especially in high-asset Texas divorces. If you are facing divorce, our experienced Texas divorce attorneys can help you protect your rights. Call McClure Law Group at 214.692.8200 to discuss your case.
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Spouse May Be Required to Reimburse Community Estate in Texas Divorce
Reimbursement for Loans Made to Separate Property in Texas Divorce