Deciding to end a marriage can give rise to a wide range of emotions, including resentment.
Unfortunately, these feelings can lead divorcing spouses to do things that they would not usually be capable of, such as hiding or wasting marital assets.
While this type of conduct is strictly forbidden during divorce, it can be more difficult to hold someone accountable for wasting marital assets before a couple actually files for divorce.
Fortunately, it is possible, so if you and your spouse are considering divorce and you believe that he or she is attempting to transfer money before divorce, it is critical to contact an experienced Texas property division lawyer who can help protect your interests.
Marital Property vs. Separate Property
Texas is a community property state, meaning that divorcing couples must divide all of their marital property equally. Marital property includes all assets that were acquired by a couple after marriage.
Separate property is made up of the assets that were brought into the marriage by the parties. In most cases, separate property will remain the sole property of the original owner after divorce, but only if they were not commingled with marital assets.
Transferring Marital Assets
Unfortunately, in an effort to avoid splitting marital assets equally, some spouses will attempt to transfer or spend those assets, sometimes before the parties have even filed for divorce. This is known as the dissipation of marital assets.
This is unlawful under state law, which prohibits divorcing spouses from intentionally mishandling, hiding, or wasting marital property. This includes selling or spending assets and funds, as well as transferring property to a third party without the other spouse’s consent.
When a person is engaged in this type of conduct during divorce, he or she can be held in contempt of court. Judges also have the option of freezing a couples’ assets, or even awarding the other spouse a larger portion of the marital assets.
When a couple has yet to file for divorce, however, it can be more difficult to hold the at-fault spouse accountable for transferring marital property.
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When couples file for divorce in Travis County (and in many other counties in the state), courts automatically grant temporary restraining orders that prohibit the parties from wasting, hiding, or transferring marital assets.
Although these orders are granted immediately upon filing for divorce, in some cases, it is already too late, as a spouse has transferred valuable property to someone else before the filing even took place.
Fortunately, it is possible to challenge these types of expenditures, as many courts are willing to assess transactions that took place before divorce proceedings were commenced if those transactions occurred at a time when the marriage was already undergoing an irrevocable breakdown.
The burden of proving that an expenditure of community assets did not qualify as waste will then fall on the party who transferred the property.
Even gifts to a couple’s children that took place around the time of separation can constitute dissipation if those gifts far exceed those made during the years that preceded the marriage’s breakdown.
Ultimately, when determining whether a spouse wasted assets in transferring them prior to divorce, courts will assess whether there is evidence that:
- The party who transferred the property did so in contemplation of divorce; or
- The spouse who transferred the property did so with the intent to deprive his or her spouse of an equal share in that property.
In this way, spouses are discouraged from challenging transactions that took place well before the marriage’s breakdown in an effort to gain an advantage during the property division process.
Instead, courts will focus on the time in the couple’s marriage when it became clear that the marriage was in jeopardy and that any major transfers were being made in anticipation of separation and divorce.
When a court determines that one spouse attempted to deprive the other of his or her fair share of the couple’s marital property by transferring it to a third party prior to divorce, it can take a few different actions, including:
- Offering the innocent spouse a greater portion of the remaining marital assets;
- Holding the at-fault spouse in contempt of court; or
- Freezing the couple’s remaining assets to prevent further waste.
For help determining whether any of these legal remedies could apply in your own case, please call our legal team today.
A Dedicated Texas Property Division Lawyer
To speak with dedicated property division lawyer Ben Carrasco about holding your spouse accountable for wasting marital assets, please call the Law Office of Ben Carrasco, PLLC at (512) 320-9126 today.