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Wasting of Community Assets in Texas

poolAfter a Texas divorce, the husband appealed the lower court’s division of marital property. He argued that there wasn’t enough evidence to support the lower court’s finding that he’d wasted community assets in the amount of about $800,000.

The couple were married in 1968. The husband left the marital home in 2013, when the wife was disabled. She was not able to leave the home or take care of herself. Meanwhile, the husband went to live with his girlfriend from 2014-2015 and spent money while living with her. The wife sued for divorce in 2014 when the spouses were retired, and there was a bench trial on the issue of how to distribute property. The husband wasn’t represented by an attorney.

During the divorce, the husband said the money he’d spent while living with a girlfriend was for regular expenses, but he also testified he wouldn’t have had those expenses if he’d been living with his wife. He also testified his girlfriend and he had purchased a vacant lot in a planned development in Belize in 2010. He acknowledged that he’d established a bank account there and had sent money to that account. He also admitted that he withdrew about $703,000 from his retirement account and that he’d made withdrawals from other accounts. He said it was for bills and pleasure.

A CPA retained by the wife testified that she’d tried to trace the distributions and withdrawals. The husband stipulated the CPA was qualified as an expert and didn’t object to the report she’d authored and documents in support being admitted as evidence. The CPA believed that the financial documents were deficient and wanted to meet with the husband to fill in gaps, but he refused. Ultimately, she couldn’t account for more than $741,000 that had been withdrawn.

The husband’s sister testified that her brother left his wife because he couldn’t stand her and wanted to have sex. She also testified that the brother hadn’t been honest because the wife didn’t know what he was doing to her. She also told the court that the husband had tried to have himself declared the wife’s guardian after the wife sued for divorce, and the wife had spent thousands to oppose this until the probate court concluded she could make her own decisions.

The husband’s witnesses didn’t testify on withdrawals, and the husband had no financial expert witness.

The judge signed a divorce decree dissolving the marriage on the basis of adultery and insupportability. The property in another country, a minor bank account, an inactive business, a car, and other personal property were assigned to the husband. Meanwhile, two real property parcels, financial accounts, older vehicles, and other personal property were assigned to the wife. The lower court found that the husband had wasted $800,000 in community assets. The wasted funds were charged against the husband as part of the marital property division if the estate were reconstituted to include the wasted assets.

The husband appealed, arguing that there wasn’t enough evidence to support a finding of waste. The appellate court reasoned that the lower court’s division doesn’t need to be equal and has to take into consideration factors including the spouses’ abilities and capacities, benefits derived from continuing the marriage, education, relative physical conditions, business opportunities, disparity in age, size of the separate estates, and disparities in earning capacity.

When a lower court doesn’t sign factual findings, the court presumes the lower court made all necessary findings to support its judgment. The appellate court reasoned that a husband and wife have a fiduciary duty regarding the community property each one controls. Breaching this duty is a fraud on the community. Waste is a type of fraud on the community, and it happens if one spouse depletes marital assets without the other spouse knowing or consenting. There’s a presumption of waste if one spouse disposes of the other’s interest in the marital property without the other spouse consenting or knowing, and the court can make a waste finding if one spouse uses too many funds without the other’s permission. In this case, the husband admitted that he withdrew about $703,000 from retirement accounts and that the wife was disabled and unable to leave her home when he left her to live with his girlfriend.

The evidence supported the lower court’s finding that he’d disposed of the community funds without his wife knowing, and this created a presumption of waste. The burden was on the husband once there was enough evidence to support the waste finding to show that how he used the funds was fair. He didn’t meet that burden.

If your high-asset divorce involves matters related to property distribution, contact the Texas attorneys at the McClure Law Group at 214.692.8200.

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