How Is the Dissipation of Assets Addressed in Texas Divorce Cases?

 Posted on March 29, 2023 in Divorce

When it comes to divorce proceedings, it is essential to understand how issues related to a couple's property will be addressed. In the state of Texas, all assets and debts that a couple accumulated during their marriage are regarded as "community property," meaning that they are owned by both spouses equally. All community property will be divided between spouses during the divorce process. However, the process of dividing property can become much more complex and difficult in situations where a spouse has wasted or dissipated marital property. That is, if either spouse took actions that could reduce the value of a couple's community property, and they did so for non-marital reasons, this may be considered dissipation of assets, and it may need to be addressed during the process of dividing property.

What Is Considered Dissipation Of Assets?

Asset dissipation involves one spouse using marital funds for their own benefit before or during their divorce proceedings. Asset dissipation can take many forms, and it can include activities such as gambling, excessive spending, or transferring money to other parties without the other spouse’s knowledge or consent. It may also include intentional destruction of property or other activities in which marital funds were wasted, such as by buying expensive items for a person's sole benefit or using money to further an extramarital affair. In addition, if one spouse sells any property that was acquired during the marriage without consulting their partner or obtaining permission from the court, this may be considered dissipation.

Uncovering evidence of asset dissipation is not always easy. However, bank statements may show when money was withdrawn from accounts, or credit card statements may show purchases that were made. A person who believes that asset dissipation has occurred may be able to work with a forensic accountant or other financial experts to show that community property was used for non-marital purposes.

How Are Dissipated Assets Addressed in a Divorce?

In Texas, asset dissipation may be considered "fraud on the community." This form of fraud may include any actions that depleted the value of a couple's community property. In these cases, the court will look at the amount that was lost due to dissipation to gain an understanding of what assets would be included in the "reconstituted estate." That is, the court will look at the value that a couple's community property would have had if dissipation had not occurred. It will then determine how to divide the reconstituted estate.

When dividing community property in these situations, the court may choose to award an appropriate amount to the spouse who did not commit dissipation. That is, the wronged spouse may receive a larger share of the couple's marital property to account for the amount that was dissipated by the other spouse. The court may also award a money judgment in which the spouse who dissipated assets will pay a certain amount to address the losses that occurred due to dissipation, or it may implement both of these solutions to ensure that the financial interests of the wronged spouse will be protected.

Contact Our Bexar County Asset Dissipation Lawyer

Dissipation of assets is a serious issue that can have a significant impact on both parties involved in a divorce case in Texas. It is important for divorcing couples to be aware of what constitutes asset dissipation, how these actions may be uncovered, and how to ensure that community property will be divided correctly. At Brandon Wong & Associates, our San Antonio property division attorney can advocate for your interests during your divorce and ensure that issues related to your property and finances will be handled correctly. Contact us at 210-201-3832 to set up a consultation.

Sources:

https://www.forbes.com/sites/jefflanders/2016/11/01/what-is-dissipation-of-assets-in-divorce-and-what-if-anything-can-you-do-about-it/#5074e0cf3ec0

https://statutes.capitol.texas.gov/Docs/FA/htm/FA.3.htm

https://statutes.capitol.texas.gov/Docs/FA/htm/FA.7.htm#7.009