Let us take a look at a legal idea that might not be as well-known: special community property. This is a type of marital property that only one spouse manages or controls—even though both spouses technically own it as part of the community estate.
There are a lot of reasons why special community property might exist, and it can include all kinds of assets. But just because one spouse has control over it does not mean they can do whatever they want with it. Since it still belongs to both people in the marriage, the spouse who manages it must handle it fairly and reasonably. For example, if one spouse were to take this property and gamble it all away at a casino, that would almost definitely raise legal issues.
Now, what happens if one spouse starts giving away large amounts of this property to their kids or other family members right before a divorce? In Texas, this could be considered fraud—either actual or constructive—depending on the details of the situation. That kind of behavior can affect how the court divides property during the divorce.
This exact issue came up in a recent Texas case called Liu v. Li (2025). Let us break it down and see what happened.
Factual Posture of the Case
In the case of Liu v. Li (2025), the husband had control over a large amount of special community property during the marriage. He kept some of this money in a separate bank account that he shared with his mother. The couple had two children, but by the time they filed for divorce, both kids were already adults.
At the divorce trial, each spouse accused the other of committing actual and constructive fraud while they were married. During the trial, enough evidence came out to show that the husband had made several large transfers from the special community property account. These included payments to both children, money for college tuition and housing, transfers to his mother, and payments to his sister.
The wife had kept track of these transactions and brought an itemized list to court, arguing that these were improper uses of special community property.
In the end, the court sided with the wife and ruled that the husband had committed constructive fraud against the community estate. The total value of their community property was just over $1.05 million, and the judge awarded the wife 55% of it. The husband did not agree with the outcome and decided to appeal the decision.
Ruling and Post-Ruling Discussion
After the trial, the husband tried to challenge the court’s decision by arguing that there was not enough evidence to support the ruling. He claimed that the evidence did not prove, either legally or factually, that he had committed constructive fraud against the community estate.
But the court did not agree. As mentioned earlier, the wife had provided a detailed list of the questionable transfers, and both sides had testified during the trial. The evidence clearly showed that the husband made these transfers without telling his wife or getting her approval.
When reviewing the case, the appellate court looked at the trial judge’s actions using a specific legal standard. In the end, they decided there was not enough proof that the trial court had made a mistake or acted unfairly.
This case is a great example of how constructive fraud can seriously affect how marital property gets divided. It also makes it clear that even property controlled by just one spouse—like special community property—can still be part of a fraud claim. Because the husband made these transfers secretly and they did not benefit the wife in any way, the court had strong reasons to say that fraud took place.
Contact Goldsberry Portz Divorce & Family Lawyers, PLLC, for More Information
If readers want more information on constructive fraud, special community property, factors determining constructive fraud in Texas, property division generally, or any other family law related matter, contact Goldsberry Portz Divorce & Family Lawyers, PLLC, today by calling 281-485-3500.