Click here to read a very detailed article on fraud and waste claims in a Texas divorce.
“In the divorce context, a claim for a breach of fiduciary duty is the same as a claim for fraud on the community,” which is “a judicially created concept based on the theory of constructive fraud.” No dishonesty of purpose or intent to deceive must be established to prove constructive fraud.
A related concept is waste of community assets, which occurs when one spouse, dishonestly or purposefully with the intent to deceive, deprives the community estate of assets to the detriment of the other spouse. “Expenditures for the benefit of a paramour also establish waste.”
In Puntarelli v. Peterson, 405 S.W.3d 131 (Tex. App. – Houston [1st Dist.] 2013, no pet.), the wife asked the age old question “where did all of the money he earned go?” The wife was awarded a $196,000 judgment for wasting community funds because the husband could not account for how he spent his significant income. The wife merely had to show that the husband’s expenses were much less than his income and then the burden shifted to the husband to show where the money went.
If a spouse is found to have committed waste/constructive fraud, then the value of that claim is considered in the property division as if it was an asset of the spouse who wasted the money. The judge can also consider the waste in deciding whether to split the entire community estate 50-50 or 65% to the other spouse or something in between.