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What happens to retirement plans in a Texas divorce?

On Behalf of | Dec 7, 2021 | Divorce

Maybe you have spent decades saving for retirement, or perhaps you are a stay-at-home spouse who doesn’t have any retirement savings of your own. In either scenario, you likely have significant concerns about what divorce might mean for your future retirement.

No one should have to remain in a miserable marriage just so that they can retire. When you understand how the Texas courts will handle your retirement assets during a litigated divorce, you may feel more confident about filing. You will also be in a better position to negotiate a settlement with your spouse when you understand the standard used by the Texas courts.

Community property rules can affect your retirement accounts

A Texas family law judge must apply the state’s community property law when they divide a couple’s assets. If you and your spouse have signed a prenuptial agreement, then the terms of that agreement will have a strong impact on the property division process. If you did not, then all of your community property is subject to division.

Effectively, all of the income that either of you earned during the marriage is community property without a marital agreement. The pool of community property also includes employment benefits. Whether you funded a retirement account with your own income or your spouse has an employer-sponsored matching account, you may need to split any amount contributed during the marriage.

The same rules also apply to pensions. It does not matter if only one spouse has their name on the account. It is when someone earns the income or benefit that dictates if the spouses have to share them. Some of the retirement account or pension may be protected from division if one spouse contributed money before the marriage or after the couple legally separated. The amount accrued during the marriage will absolutely play a role in property division.

Dividing your community property doesn’t require that you split every asset

While you and your spouse may each have a claim to the community property from your marriage, that certainly doesn’t mean that you have to divide every individual asset in half.

You have the opportunity of using the value of certain assets or death to balance out other property. You can potentially negotiate your own arrangements for property division outside of court, which may be easier now that you understand what you can claim or defend from a claim by your spouse.

Reviewing your property and learning about the law will make it easier for you to divide your property in a Texas divorce.

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