Texas Legal Glossary · Family Law

Fraud on the Community

Written and reviewed by Shane M. Boasberg, founder of SMB Law, PC · Licensed in Texas since 2003 · Updated October 2026

Definition: Fraud on the community is one spouse’s improper transfer, hiding, or wasting of community property to the detriment of the other spouse, which a Texas divorce court remedies under Family Code § 7.009 by reconstituting the estate and adjusting the division.

Also called: waste of community assets, dissipation, constructive fraud

What fraud on the community means in Texas

Fraud on the community is a spouse’s breach of the fiduciary duty owed to the other spouse in managing community property. It comes in two forms. Actual fraud requires intent to deceive, such as secretly moving money to a hidden account. Constructive fraud requires no bad intent, only a transfer or expenditure that is unfair to the other spouse, such as large gifts to a third party or money spent on an affair.

Texas Family Code § 7.009 supplies the remedy. If the court finds fraud, it calculates the amount by which the community estate was depleted and the value of the reconstituted estate, meaning the estate as it would have existed had the fraud not occurred. The court then divides that reconstituted estate in a just and right manner.

How it works in practice

The Texas Supreme Court held in Schlueter v. Schlueter, 975 S.W.2d 584 (Tex. 1998), that there is no independent tort claim for fraud on the community between spouses. The remedy lives inside the property division, not in a separate lawsuit for damages. Section 7.009 codified and expanded that approach.

Under § 7.009(c) the court may award the wronged spouse a larger share of the remaining community estate, a money judgment against the other spouse, or both. Once the wronged spouse shows a transfer happened, the burden of showing it was fair rests on the spouse who made it. Bank and credit card records are how these claims get built.

Why it matters in your case

Fraud findings change the math of the whole case. A $100,000 depletion is added back to the estate on paper, and the wronged spouse can be made whole from assets that still exist. Where the money is truly gone, the money judgment can be collected after divorce like any other judgment. Travis County standing orders, which take effect the moment a divorce is filed, also prohibit unusual transfers, so late dissipation can be addressed as a restraining order violation as well.

Example

During the last year of their marriage, Greg withdraws $45,000 from a joint savings account and spends it on travel and gifts for a girlfriend. His wife Alicia proves the withdrawals with bank records. Greg cannot show they benefited the community. The court finds constructive fraud, reconstitutes the estate at its pre-withdrawal value, and awards Alicia a larger share of the remaining assets to account for her half of the $45,000.

This entry explains Texas law in general terms and is not legal advice for any specific situation. Statutes and case law change; the date above reflects the last review.