Texas Divorce Attorney Blog
A trial court in a Texas divorce must divide the community estate in a just and right manner. The court has broad discretion in determining what is just and right, and, when there is a reasonable basis for doing so, the court may order a disproportionate division. The court may consider a party’s claims for waste or fraudulent transfer of community property in its property division. Waste, or constructive fraud, occurs when one spouse wrongfully depletes the community estate without the knowledge or consent of the other spouse. Actual fraud occurs when a spouse transfers community property or uses community funds for the primary purpose of depriving the other spouse of their use and enjoyment. A reimbursement claim arises when the assets of one estate are used for the benefit of another estate without benefit to the first, such as community funds being used to pay for repairs to one spouse’s separate property. A former wife recently appealed the property division in her divorce, arguing the court abused its discretion by not awarding her a disproportionate share due to her fraud and reimbursement claims.
Divorce Proceedings
According to the appeals court, the parties each owned property when they married and acquired property together during the marriage. The husband granted a gift deed to a half interest in his separate property, identified by the court as “Bayou Shore.” The wife’s separate property was sold to her brother to resolve a community debt during the marriage.
Both parties alleged fraud and made claims for reimbursement and waste.
The trial court recognized three separate properties belonging to the husband. The court also recognized that each party had a half separate property interest in the Bayou shore property. Additionally, the court recognized each had a separate property interest in the funds that accrued before the marriage in their own retirement accounts.
The parties owned two properties as community property, a timeshare in Missouri, and several vehicles. The trial court ordered that the community real property be sold and the parties equally share the proceeds. Three vehicles were awarded to the wife and two to the husband. There were specific procedures for the sale of the real estate and the court directed the husband to manage and maintain the properties, collect rent, and pay mortgage and taxes. He was also directed to account for the income and expenditures related to the properties.
The final decree did not expressly address the fraud, reimbursement, or waste claims. Neither party requested findings of fact and conclusions of law and the court did not file any.
Allegations of Fraud
The wife appealed, arguing the trial court abused its discretion in equally dividing the community estate. She argued she should have been awarded a disproportionate share based on her fraud and reimbursement claims.
The wife alleged the husband hid community property income from her by not sharing rental income from his separate property. Generally, when separate property produces income during the marriage, the income is community property. The husband had admitted he gave rental income from one property to his son. The wife alleged he hid other rental income and did not deposit it in their joint account. The husband admitted he did not deposit the money in the bank, but said he had shared the money with the wife “many times,” and used it for trips and parties for both of them. He also said he paid for the wife’s mother to live with them and purchased a house for her to live in.
The appeals court noted the evidence showed that the husband shared the rental income from his separate properties with the wife “at least to an extent.” Furthermore, the wife did not cite any evidence showing he hid the income from her. The appeals court pointed out that the fact he did not share the income with her equally did not prove that he committed fraud on the community without evidence he did it without her knowledge or consent or failed to account for the funds. The appeals court determined the wife had not established that she conclusively provide fraud against the community or that the court erred by not awarding her a disproportionate share of the community estate.
Reimbursement Claims
The wife also argued that she had given her brother part of her separate property to cancel debt the parties had borrowed from him to purchase a restaurant property. The husband testified the value to the community estate from the transaction was just about $40,000. There was also testimony suggesting that a joint property was also given to the brother to resolve the debt.
The wife also argued that community funds were used for the mortgage, taxes, and repairs on the husband’s separate property. Although she alleged in her brief that more than $1 million in community rental income was used for the repairs, the evidence she cited did not support a specific amount. She had said she did not “have the amount” and acknowledged she did not have receipts to show what had been paid. There was evidence the wife had made two payments for taxes on one of the husband’s separate properties, totaling $2,311, but it did not indicate the source of the funds.
The husband argued he also had reimbursement or waste claims because the wife had used rental income for personal expenses when she had sole management rights of some of the community property while the divorce was pending. He alleged she had used rental income for a vacation for her extended family and to pay for her adult child’s tuition, insurance, and vehicle, instead of paying the property taxes and mortgage or sharing the income with him. He also alleged a specific number, but the appeals court noted it was not supported by direct evidence. The appeals court pointed out, however, the trial court ordered certain property taxes be paid from the wife’s share of the proceeds of the sale.
The wife failed to provide an analysis of how the reimbursement or wasting claims factored into the property division. She did not state the total values of the claims, the estate, or what portion of the estate was awarded to each party and did not cite to the record for the values.
The appeals court noted the trial court may have considered the reimbursement and wasting claims in its division. Courts are given broad discretion in applying equitable principles and may offset competing claims against each other. As the appellant, the wife had the burden of showing that the division was unjust and unfair to the extent it constituted an abuse of discretion. The appeals court determined she failed to do so.
Property Management
The wife also argued the trial court erred by unjustly favoring the husband in its orders regarding the and interim management of the community properties. She argued that she previously had management rights and argued there was insufficient evidence to support the court giving those rights to the husband. The appeals court pointed out that there was a factual basis for the change because there was evidence the wife had failed to pay taxes and mortgage or share the rental income when she managed the property.
The appeals court rejected the wife’s other arguments and affirmed the final divorce decree.
Seek Guidance from an Experienced Divorce Lawyer
Property division when both parties came into the marriage with significant assets can be complex. If you are considering divorce and believe your spouse may have hidden or improperly used community assets, a skilled Dallas family law attorney can help. Set up an appointment with McClure Law Group at 214.692.8200.