Proceeding into Divorce aware of risks regarding retirement division, Part Two

Learn about social security benefits and their effect on your Divorce

Attorneys are great at courtroom advocacy and knowing the ins and outs of the law. That much should be a baseline for what your attorney can do for you. Those attorneys who set themselves above the pack in terms of their ability to represent you will also teach you about the law and how it applies to your life and help guide you in a way that benefits you and your family.

A pretty mundane area of the law that can significantly impact your life is social security benefits. While it is not likely that social security benefits will be treated as community property in your Texas divorce, there are special rules that apply to social security benefits that set them apart from other areas of the law.

If you were married to your spouse for at least ten years, then it's likely that you would be able to receive benefits under their name based on their working history once you become divorced.

As a result, learning this fact in addition to what your spouse is estimated to receive at retirement age (62 or 67) is crucially important. Depending on what your retirement benefit would be through Social Security, you can decide whose name you want to claim benefits under later in life: your own or your ex-spouse's.

What about if you decide to get remarried after your Divorce? How will this affect your rights to your ex-spouse's retirement accounts?

If you intend to take advantage of your government-employed ex-spouse's pension or retirement benefits, you may be waiving your future rights to do so if you intend to get remarried. This is true if your spouse is employed by the federal government and decides to remarry before age 55.

In some instances, spouses can negotiate that a spouse can pay retirement benefits via spousal support or spousal maintenance. This is something to keep an eye on in your Divorce as your remarrying will cancel out any spousal support obligations that your spouse has.

Pre-approval on a pension order before the Divorce concludes important

Every pension plan has a plan administrator whose job is to oversee the running of the pension and approve and accept the pension order that the judge signed off on in your divorce case. Until this step is completed, you will not be able to receive any money under the pension awarded to you in the property division of your Divorce.

Your attorney should be aware of the rules that your spouse's particular pension plan has in place, and the order drafted to grant you access to its funds must follow along with the plan's desired language. The failure to do so will result in the order being rejected.

This means that your attorney will need to go back to court to seek the judge's signature on another order that the plan will accept on your behalf. Don't be surprised if your attorney seeks additional legal fees to do so.

The bright side is that you can avoid an unnecessary delay and pay any additional legal fees if your lawyer can contact the plan administrator in advance of the end of your case to see if the order that had been drafted will be accepted.

When it comes to a government or private company's pension plan, many administrators will take the time to review orders in advance. They will tell you whether the proposed order will be acceptable. If the order is accepted, all your attorney has to do is request a judge's signature, and you should be all set.

You should receive an explanation of what happens if your spouse takes specific actions towards their retirement accounts.

Unfortunately, despite what you negotiate in your Final Decree of Divorce, your ex-spouse's actions during your post-marriage life will affect your ability to take full advantage of whatever benefits are available under the retirement plans.

For instance, your spouse could never actually apply for their pension benefits. On the other end of the spectrum, your spouse could be injured and never return to work. Would you be protected if a situation like one of these came about? While you cannot predict every future event of your life, it is possible to consider some circumstances and plan accordingly.

For example, you could attempt to negotiate within your Final Decree of Divorce that your spouse will have to pay spousal support to you if they were to take any action that adversely affected your ability to collect the pension or retirement benefits awarded you in your Divorce. There are creative solutions to problems like these, but you and your attorney have to communicate well and need to be able to be on the same page.

The bottom line: Work together with your attorney

As you can tell, a lot of the work to be done in your Divorce is taken on by your attorney. Do not, however, fall into the trap that they will do everything for you. It would help if you took responsibility for some items as your life is affected by the decisions made in your Divorce- not your attorney.

Work together with them and decide what your responsibilities are. You can start early by collecting information about the retirement benefits available to you.

Ebook

Adobe Stock 62844981[2] If you want to know more about what you can do, CLICK the button below to get your FREE E-book: "16 Steps to Help You Plan & Prepare for Your Texas Divorce"