Dissipation of Marital Assets in Texas

In a Texas divorce, a fair division of the marital estate is only possible when both spouses are honest about what’s on the table. If your spouse has been quietly draining joint accounts, undervaluing business interests, or transferring their assets to third parties, you may be dealing with dissipation of marital assets. Here’s what you need to know about how Texas law treats this kind of conduct and what it takes to hold deceptive spouses accountable.

What Constitutes Dissipation of Marital Assets in Texas?

Dissipation of marital assets occurs when one spouse wastes, misuses, or conceals community property for purposes unrelated to the marriage, particularly in anticipation of divorce. In high-asset divorce cases, this conduct can take many forms, including:

• Excessive Spending on a Romantic Partner: Using community assets to spend on lavish gifts, travel, or accommodations for an affair partner
• Concealment or Transfer of Business Interests: Undervaluing an ownership stake or transferring it to a family member or business associate for far less than fair market value
• Liquidation of Investment Accounts: Moving funds out of brokerage or retirement accounts without disclosing the transfer
• Gambling Losses: Incurring significant gambling losses that deplete community funds with no benefit to the marital estate
• Destruction or Neglect of Property: Intentionally allowing real estate or other assets to deteriorate or destroying joint property outright

In high-net-worth cases, these tactics are often deliberate and carefully structured to obscure what’s actually happened. Texas courts don’t look kindly on this kind of conduct.

Texas Community Property Laws

Texas is a community property state, which means that most assets acquired during a marriage belong equally to both spouses. Under the Texas Family Code, courts must divide the community property in a marital estate in a manner that is “just and right” with respect to each party in the context of a divorce.

That equal ownership is precisely why dissipation is so consequential in asset division proceedings. If one spouse depletes or hides community property, they’re not just wasting money. They’re reducing the pool of assets subject to division and effectively stealing from the other spouse’s share. 

The characterization of assets as “community” or “separate” property is also relevant in asset division. This is because a spouse who uses community funds to benefit their separate property, or who conceals the true nature of an asset, can shift the equitable balance of the entire division.

How Texas Courts Handle Dissipation Claims

Texas Family Code Section 7.009 explicitly addresses what it calls “fraud on the community.” Per this law, if a court finds that a spouse committed actual or constructive fraud on the community, it will calculate the value of the “reconstituted estate” and divide that value in a just and right manner. In this context, the value of the “reconstituted estate” is the total value the community estate would have had if the fraud hadn’t occurred. The court can award the wronged spouse an appropriate share of the remaining community estate, a monetary judgment against the offending spouse, or both.

In practice, a dissipation claim requires the filing spouse to demonstrate that the other spouse wasted or misappropriated community assets for a purpose unrelated to the marriage. Dissipation findings can result in a disproportionate division of property in the wronged spouse’s favor, monetary judgments, and, in egregious cases involving fraud, punitive damages as well. Texas courts even have the authority to void transfers of community property made during a pending divorce with the intent to defraud the other spouse, provided the third party receiving the transfer was aware of that intent.

The Role of Financial Investigation in Proving Dissipation

In high-net-worth divorce cases, the process of proving dissipation is rarely straightforward. The financial assets involved, which might include closely held business interests, investment accounts, real estate holdings, retirement assets, or deferred compensation arrangements, typically require document-intensive investigation. The tools used to uncover dissipation typically include:

• Forensic Accounting: Tracing the flow of funds through business and personal accounts to identify unauthorized transfers or expenditures
• Business Valuation: Obtaining independent expert valuations to identify and challenge a spouse’s deliberate undervaluation of ownership interests
• Subpoenas for Financial Records: Compelling the production of bank statements, tax returns, brokerage records, and corporate documents
• Discovery of Hidden Accounts: Identifying offshore accounts, cryptocurrency holdings, or assets titled in the names of third parties

At Balekian Hayes, PLLC, we approach every divorce case with the courtroom in mind. That means we start building the evidentiary record from day one, not after the other side has had time to hide their tracks. We routinely work with forensic accountants and other trusted financial experts to ensure we have a full understanding of your community property and can negotiate from a position of strength.

What to Do If You Suspect Dissipation

If you suspect your spouse is dissipating marital assets, you should act now to protect yourself. Hesitation could give a financially sophisticated spouse more time and opportunity to move assets beyond your reach. Here’s what you can do:

• Document Everything You Can Access: Gather financial statements, tax returns, and records for all known accounts and assets before your access is restricted.
• Request Temporary Orders Immediately: Under Texas law, courts can issue temporary restraining orders that prohibit spouses from selling, transferring, encumbering, or concealing assets while a divorce is pending. Judges can also appoint receivers to protect the marital estate.
• Retain a Lawyer Who Can Move Quickly: Dissipation is difficult to undo once it’s done. You’ll be in a much stronger position if you have an attorney who proactively prepares for litigation from the outset, rather than responding reactively once the damage is already done.
• Avoid Tipping Off Your Spouse: If your spouse realizes you’re onto them, they may accelerate the very conduct you’re trying to prevent before a court can intervene.

How Balekian Hayes, PLLC, Can Help

Dissipation claims in high-asset Texas divorces demand more than general family law knowledge. They require representation from lawyers who understand complex financial assets and are fully prepared to litigate if settlement isn’t a realistic option.

That’s the kind of understanding and preparation that the team at Balekian Hayes, PLLC, brings to every case we handle. Our attorneys represent business owners, professionals, and high-net-worth individuals in precisely these kinds of complex, high-stakes disputes. 

If you suspect your spouse is dissipating marital assets, contact Balekian Hayes, PLLC, today to arrange a consultation with our Dallas family law team.