When a married Texas couple divorces, the Court is responsible for dividing any community property between the former spouses in a “just and right” manner. Though that can result in a 50-50 split between the spouses, that is far from required. In fact, a just and right division can just as easily result in one spouse receiving a disproportionate share of the property. Generally speaking, the trial judge has wide latitude and discretion in awarding marital assets. If it believes a disproportionate division is just and right, a court may award more community property to one spouse, more debt to one spouse, or make tax consequences work out in one spouse’s favor.
The court can consider a wide variety of factors when determining a division of property that is just and right, but those factors do break down into one of two categories: need-based and fault-based. “Need-based” factors are based on the differing needs of the divorcing spouses, while “fault-based” are related to bad actions by one of the divorcing spouses in the marriage, Examples of need-based factors include the education level and earning power of the spouses, the length of the marriage, the health of the spouses, debts and liabilities of the community property, tax consequences of division, and the size of each spouse’s separate estate. Fault-based factors include adultery, cruelty, physical abuse, and criminal behavior.
Another common reason that a court may provide for disproportionate division is fraud by one spouse. Upon marriage, spouses have a fiduciary duty to one another. This includes a duty not to commit fraud on the community property, thereby harming the other spouse. Fraud claims can be based on actual or constructive fraud. Actual fraud involves dishonesty or an intent to deceive the other spouse by transferring or spending community funds to deny the other spouse the use and enjoyment of the assets involved. A good example of this is when a spouse drains joint bank accounts and transfers community property to third parties days after the other spouse files for divorce.
Constructive fraud does not require an intent to deceive or harm. Instead, it’s based on each spouse’s responsibility to act in the “utmost good faith” when it comes to community property. Constructive fraud occurs when one spouse unfairly disposes of or encumbers the other spouse’s interest in their community property or unfairly incurs community indebtedness without the other spouse’s knowledge or consent. The major issue in such cases is often whether the transaction in question was “fair,” which is itself a multi-factor question. If a Court finds that fraud has occurred, one of the remedies it can order is a disproportionate division of the community property.
If you’re in Texas and contemplating or going through a divorce, you need experienced representation like Robert Tsai. Otherwise, you could end up getting less than you deserve.
To learn more about the division of property in a Texas divorce, schedule a consultation or call our office at 832-278-1995.