Couples save for their retirement in many ways. Over time, retirement assets can accumulate and become one of the most significant assets to divide in a divorce. At the Schneider Law Firm, P.C., we work hard to protect our clients’ interests now, and in the future, so we pay special attention to protecting their retirement savings.
When we talk about retirement assets with our clients, we discuss:
- Deferred compensation accounts,
- 401(k) accounts and 403(b) plans
- Other retirement savings
How Texas Family Law Divides Retirement Assets
How Texas law divides retirement assets depends on when the contributions were made. Texas is a community property state, which means that property acquired during the marriage is divided 50/50. Property acquired before the marriage is considered separate property. The spouse who originally had it can keep it.
Accordingly, when retirement asset contributions were made before the marriage, they are considered to be separate property. When retirement asset contributions were made during the marriage, they are community property – even if the contributions were made by only one spouse. Like other community property, the retirement assets are divided between the spouses.
It sounds simple, but it isn’t. Documenting and calculating which retirement assets are separate property can be exceptionally complex. For example, it’s common for separate and community property to exist within the same retirement account. Lawyers often consult with financial experts to make an accurate calculation.
Pensions, military retirement and Social Security spousal benefits all have different rules for eligibility, as well as for when an ex is entitled to receive funds. And for most retirement accounts—like 401(k)s—Texas courts aren’t required to divide the asset 50/50 like other community property.
Through their lawyers, divorcing spouses sometimes work out agreements that are best for the couple and that do not require cashing out part of a 401(k). For example, a spouse might keep the 401(k), but the other spouse will keep a vehicle with a value equal to that spouse’s share of the community property.
Questions About Your Retirement Assets? Ask a Lawyer.
When your retirement assets are on the line, it’s important to get advice that’s tailored to your exact situation. Get started by scheduling a confidential consultation with a lawyer at the Ft. Worth office of the Schneider Law Firm, P.C. Call 817-755-1852.