In yesterday's blog post from the Law Office of Bryan Fagan, we introduced the topics of fraud, waste and community property division. These are important subjects that have the potential to profoundly impact your divorce. We hope that you will go back and read yesterday's materials if you have not already done so. The reasoning being is that they provide a solid foundation for today's blog post as we continue to discuss fraud and waste of the community estate.
We will begin today by going over how you may be able to bring a third-party lawsuit in conjunction with a divorce case. In some cases, the reason why fraud and waste occurred in your finances is that your spouse had an affair and used community property money to buy gifts, vacations or other items for their paramour. Not only is hurtful to you on an emotional level, but it hurts you financially as well. You work hard and save money consistently only to find that your spouse is siphoning off money for another person. Ultimately, what options do you have as far as pursuing a case against the "other" woman?
A note about how constructive fraud impacts the division of the community estate
If you contend that a large amount of money is missing from your bank account, or have proof that your spouse spent a couple of thousand dollars on jewelry for the paramour, that sum of money should be awarded to your spouse in settlement negotiations. What this does is give you more assets that are actually in existence and gives to your spouse money or property that no longer exists due to their fraudulent acts.
In actuality what you are doing is pretending that your spouse still has the money somewhere, when they have spent it or otherwise disposed of it. You will get more in the final division of your community estate and he will get less. After all, he was greedy and took advantage of the situation already. It's like when you were a little kid and took cookies from the cookie jar before your mom permitted you. Later, when it was time to have a couple after dinner your mom would give the remaining cookies to your siblings and you would get none.
Third-party tort claims and Texas divorces
Now that we have wrapped up yesterday’s blog post, let’s get into the information I wanted to discuss with you all today. In Texas, you are not legally able to file a lawsuit against your spouse as a separate tort claim in conjunction with a divorce. However, you can add your spouse's girlfriend as a defendant to the case and make an allegation against her based on fraud. That person has essentially stolen your community property and the state of Texas allows you to recover the property.
Look for the following circumstances to be in place if you want to file suit against a girlfriend of your husband for conspiracy. First, the girlfriend and your spouse must have decided together to take an unlawful action that caused an injury to you from a financial perspective. For instance, tricking you into making payments on a piece of property that was already owned by the girlfriend, and then your spouse pocketing the money paid for this land could be an example of a conspiracy.
On the other hand, if you want to allege that this third party individual committed an act of fraud against you, you would need to show that the person made a false representation against you and that the other person knows what was said was false. Furthermore, you must show that the third party made this statement to you with the intent that you act in some way based on learning that information. An injury to you must have resulted from that action taken.
Consider this hypothetical situation concerning your community estate
Try this situation on for size. What if your spouse owns a separate property company. That company owns several restaurants here in the Houston area and during your marriage, he uses that business to start a new bar. The issue in conjunction with your divorce is that your spouse could have used community funds to open up the bar. Doing so would have caused the bar to be community property and thus would have allowed you a share of it in the divorce.
It can be argued that your spouse violated their fiduciary duty to you as their spouse is doing this. A fiduciary is a person with whom you share a relationship (personal or professional) where he or she is obligated to act with your best interests in mind at all times and to put their self-interests on the backburner. Is an argument likely to be successful if you choose to implement it in your divorce case?
How might you argue this point in court? You could start by stating that underlying a fiduciary relationship is a duty that is based on trust between you and your spouse. By diverting what should have been community funds, you are placing your interests ahead of your spouse. This flies in the face of trust, loyalty and being a fiduciary. Your husband acted as a company president in his capacity as a member of your family. If a company president acted out of self-interest rather than as the CEO of a major brand, it would have the potential to significantly harm the company as a whole.
At the very least, your spouse, it could be argued, must make you aware of every opportunity to benefit your community estate. You may choose to say don’t bother with the deal, but you have to be given the option. This is not a line of arguments that I have seen successfully argued in court but I wanted to present it here if for no other reason than to get you thinking about how you and your spouse essentially act as presidents of a company when acting in your capacity as husband and wife of your community estate.
Spousal maintenance and fraud
If your spouse committed fraud against you then a trial court can consider this having occurred when determining how much post-divorce spousal maintenance to award to you. When a judge decides that you are entitled to spousal maintenance, he must take it a step further and decide how much money you should receive, how long you should be paid for any other details necessary for arriving at a final spousal maintenance award.
If your spouse engaged in fraud, waste or any other acts that saw the value of your community estate significantly decreases then this can be considered by the judge when determining the final level of spousal maintenance that may be paid. If your spouse wasted community resources by spending it on their paramour, then you should be able to receive an increased amount in spousal maintenance based on whatever circumstances are relevant to your case.
What happens with the community and separate property in a divorce?
All of the above discussion is relevant to your case only so far as it changes or defines how the property in your divorce is going to be divided between you and your spouse. If it doesn’t impact the dollars and cents of your family law case then our entire discussion was all for naught. Unless you have a premarital or marital property agreement in place, the first time that anyone attempts to divide up your community estate will be in the divorce.
Now that we know a little more about how fraud, waste and the community estate all relate to your divorce, let's take it a step further and discuss how property is classified in conjunction with a divorce. Specifically, how is it that a piece of the property ultimately is classified as a piece of separate property or as a piece of community-owned property? We introduced this topic somewhat at the beginning of our blog post a couple of days ago, but I am going to get into it in more detail right now.
At the time that we purchase a piece of property, it is then that the property is either separate or community property. Likely, it will never be recharacterized as anything different than it was at the moment that you purchased it. If you are buying a piece of real estate before you are married, the controlling date as determining separate or community ownership is when money is exchanged at the outset of the process of buying the land. It is not the day of the closing or when you move into the house that determines whether or not the property is community or separate property.
A separate property piece of land belonging to you can find you and your spouse build a separate property hone on that land during the marriage will result in the house being separate property as well, even though it was built during your marriage. As we touched on yesterday, however, there may be reimbursable costs associated with the purchase and upkeep of the home.
It is presumed that all property acquired during your marriage is considered to be community property
At the time of your divorce being filed, you will be asked by your attorney to fill out an inventory of all of the property that you own, along with an appraisement that asks you to estimate the value of those pieces of property. Pay from your employers, income from separate property and other sources would count as separate property.
Debt is also a relevant topic when describing community property. A debt or loan that is incurred during your marriage is presumed to be community debt unless the creditor agrees to only take into consider one of your separate property for payment on the debt. This does not happen much, and if it does you will need to make sure that this is noted in the financing agreement and payment plan language for any contract that you sign.
What is separate property?
Separate property is defined as property that is claimed by you or your spouse before marriage, acquired during the marriage by gift or via a will or is a settlement or judgment related to a personal injury settlement. Additionally, if you can show that you purchased an item with the separate property during your marriage, then that piece of property is your separate property.
The next logical question to be asking yourself is what kind of evidence do you need to provide to a judge to prove that a piece of property is your separate rather than community property. Testimony, documents, statements in discovery responses and expert witness testimony can be used to help you argue that a piece of property is your separate property.
The inventory that we spoke about a moment ago that you will fill out at the beginning of your divorce may be all that you need to prove that an item is your separate property. However, if the inventory lists a piece of property as the separate property of both you and your spouse then additional evidence will need to be submitted.
More on community and separate property will be posted in tomorrow’s blog post
If you are interested in the material that we covered in today’s blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys are available six days a week to meet with you and to answer your questions. If you have never hard the perspective of a licensed family law attorney regarding your case, now is the time to give us a call.
We understand that you have a lot of options as far as hiring a family law attorney. However, I would offer to you today that the lawyers with the Law Office of Bryan Fagan offer a combination of professionalism, experience, and results that are unmatched in our city. Contact us today to learn more about us and how we can help your family.