Wright v. Wright shows what can happen in Texas, when one spouse empties the accounts at the beginning of a divorce case.
In this case, linked to below, Jodie filed for divorce. The same day, husband emptied out their joint checking and savings accounts.
He also quickly transferred the jointly owned motorcycles to his sons’ names.
In haste, husband also quickly transferred 49% of a family business to a third party.
Husband also amended the family company bylaws to remove his wife as a company director.
Naturally, this resulted in drawn out, expensive litigation.
The parties were able to enter a settlement as to the division of their entire estate at a formal medition.
However, at mediation, the parties agreed that the issue as to whether husband had committed fraud against her by transferred the business ownership would remain unresolved and would go to a final trial.
At the trial, regarding this change of company ownership, wife Jodie won a judgement of over $300,000.
The Wright case sited the following helpful laws:
The managing spouse may make moderate gifts for just causes to persons outside the community. Mazique v. Mazique, 742 S.W.2d 805, 808 (Tex.App.-Houston [1st Dist.] 1987, no writ); Hartman v. Crain, 398 S.W.2d 387, 390 (Tex. Civ.App.-Houston 1966, no writ). But a gift of community funds that is capricious, excessive, or arbitrary may be set aside as a constructive fraud on the other spouse. Mazique, 742 S.W.2d at 808; Horlock, 533 S.W.2d at 55. The trial court obviously concluded that this gift was excessive.
As its title “Protection of Third Persons” reflects, Section 3.104 primarily addresses a community property transfer from the standpoint of a third party. In general, community property is subject to “joint management, control, and disposition of the spouses unless the spouses provide otherwise by power of attorney in writing or other agreement.” TEX. FAM.CODE ANN. § 3.102(c) (Vernon 2006). However, Section 3.104 provides a presumption to a third party where community property is held in one spouses’s name only.
Definition of Constructive Fraud:
It is constructively fraudulent for one spouse to dispose of the other spouse’s interest in community property without that spouse’s knowledge or consent. In re Marriage of DeVine, 869 S.W.2d 415, 428 (Tex.App.-Amarillo 1993, writ denied).