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In Texas, hiding assets during a divorce has severe consequences

Texas is a community property state. This means that most assets either spouse acquired during the marriage are considered the parties' community estate. A Texas court will divide community property between the spouses to achieve a result the court deems fair. This does not necessarily mean a completely equal split. Assets either spouse owned before the marriage, or acquired as gifts or through inheritance, remain the separate property of that spouse.

Unfortunately, some spouses will try to hide community assets or understate their value, in order to cheat the other spouse out of their fair share of the property division. In Texas, this is known as fraud on the community. If the court discovers fraud, the dishonest spouse will face severe consequences.

Once the judge determines that fraud on the community has taken place, the judge will calculate the amount by which the community estate was diminished by the fraudulent conduct. The judge will determine the value of the reconstituted estate, which is the value the estate would have had if there had been no fraud.

This reconstituted estate is then divided between the parties in whatever manner the court deems fair and just. This will typically mean that the wronged spouse will get the portion of the property he or she would have received in the absence of fraud. The judge can also enter a money judgment against the dishonest spouse and in favor of the wronged spouse.

Forensic accounting methods can be used to expose fraud and bring it to the attention of the court. A lawyer who knows the telltale signs of fraud and how to find hidden assets can be indispensable in this situation.

Source: Tex. Family Code §§ 7.001, 7.009, accessed Oct. 12, 2014

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