In a divorce case, one of the most important yet under-discussed topics is that of dividing up retirement benefits between you and your spouse. Many people do not stop to consider the importance of retirement benefits because they may either not have a lot in the way of retirement benefits or you may be young enough where retirement is not something that you consider all that frequently. You may have a 401K or individual retirement account that you contribute to regularly but you do not actively think about saving for retirement all that much.
Or, your retirement benefits may be something that you have not started to plan 4 at all. Many times younger people have not even started saving for retirement at the time that they go through a divorce. Those of you who are going through a divorce and have either not worked very long or have not even considered saving yet for retirement then allow this blog post to be a warning to you. Retirement savings is something that you should think about sooner rather than later and it is also something that is an underrated part of your divorce as far as subjects that can be extremely important even if it is not at the top of mind when you file for the case.
The thing that you need to think about is there even if you are not actively thinking about your retirement during your divorce it is probable that your spouse is. You can look at this from one of two perspectives. The first is that if it is your retirement that is the most substantial out of yours and your spouses the reality is that your spouse will likely be requesting a portion of that retirement benefit. We will discuss this more and additional sections of today's blog post but the reality is that retirement benefits can be divided in a Texas divorce. As a result, you should expect that your spouse and their attorney have a plan in mind in terms of how to obtain that portion of those benefits.
By the same token, if it is your spouse's benefits that are more substantial in terms of retirement savings then he or she is likely considering how to best retain as much of those retirement savings as possible to prevent you from getting any of them in the divorce. From this perspective, you would be having to play offense rather than defense as far as those retirement savings are concerned. Income that was used to build your spouse's retirement savings during your marriage is something that you have just as much right or right to as your spouse does. Why is that? Well, it has a great deal to do with how Community property law influences divorce proceedings.
Community property laws in Texas
Texas is a Community property state. Exactly what that means and why it is significant for your divorce is what we need to figure out in today's blog post. The reality is that while we may be discussing a specific topic of dividing retirement benefits in a divorce the reality is that the larger subject related to this topic is Community property law. Let's take some time to cover the basic information associated with Community property in Texas to determine how important it is for do to not only understand property division but how it impacts retirement division, as well.
Community property laws are a vestige and holdover from Spanish and Mexican law regarding the property. Community property means that all property in existence at the time of your divorce is presumed to be held equally by you and your spouse. This is regardless of who paid for the property, whose income was utilized to pay for the property, or even who use the property more. So long as the income that was used to purchase the property was earned during your marriage then the property in question will also be classified as community and nature.
Community property is eligible for division in a divorce. The key to this topic though is understanding what property will be classified as Community property and then getting to the root of how that property will be divided. When that Community property is divided it will either be done so by a judge in a trial or by you and your spouse in mediation. The choice is largely up to you and your spouse as far as which route your case will take. There is nothing that mandates you and your spouse to go to a trial at the end of your divorce. Any belief that a divorce is a norm in a Texas divorce case would be incorrect.
Community property allows you and your spouse to become very creative in mediation when it comes to figuring out how to divide your property. The laws on Community property division are simultaneously simple and complex. They are simple in that all property at the time your divorce is filed is considered to be owned by you and your spouse together. That does not mean that you own 50% of the property and your spouse owns 50%. Rather, each of you owns an undivided, 100% interest in the property. This is significant because the market does not distinguish between either of your incomes as far as whose money went towards purchasing the property. Rather, all income earned during your marriage is considered to be a community in nature.
Community property law becomes more complex because the property that you all own can be divided in several ways between you and your spouse. There is no one way to divide the Community property. Additionally, there are other factors in play that relate to How Community property is characterized. For example, retirement savings may be in your name and may come from your job. However, the fact is that the retirement savings would stand to benefit both you and your spouse at retirement and it makes sense that this kind of property would count towards both of your incomes during property division.
Next, calculating Community property off of something like retirement benefits can be a fairly tedious task. For instance, some of your retirement savings may have been accumulated during your life before you got married. On the other hand, much of the Community property portion of your retirement savings may have come about as the result of savings during your marriage. These are factors that need to be considered before the actual division of your community estate. It is always essential to be able to build upon your savings goals by accounting for what is likely to occur in a divorce.
Community property must be added topic that you and your attorney discuss at the beginning of your case. There are many methods that the attorneys with the Law Office of Bryan Fagan employ to ensure proper classification, quantification as well as valuation of Community property. The first would be running a simple inventory of your property as soon as you learn about your divorce. This could be before your filing for divorce or and inventory and appraisement once you are served with the divorce papers.
How to get your property organized at the beginning of a divorce
Starting in Texas divorce can be one of the trickiest positions that you will ever be in terms of your emotions but also terms of your organizational and personal lives. So much is occurring at the beginning of a divorce that it would be understandable for you to lose track of what is the most important. Certainly, one of the things that I think you need to consider looking into at the beginning of your divorce is organizing and classifying property that you own. It is by organizing your property that you put yourself in a better position to understand where your property is going but also two determine how to proceed next when it comes to negotiating over the Community property that she owned.
A simple step in the tool that I like to employ in a divorce case is to both inventory and appraise your property as quickly as possible. For most people, this looks like going through your property and listing everything out piece by piece and item by item. Recommend to clients is to go through your home and take photographs of every room, dresser drawer, Closet, and safety deposit box. You never know what can happen during a divorce case. Yours would not be the first case to find out that certain pieces of property grew legs during a case and moved on. To avoid circumstances involving property being lost and you should keep track of it as best you can.
And you may be thinking that you will certainly have time towards the end of your divorce to do so. In fact, why take a lot of time at the beginning of the case to do these steps when you could probably do so later on in your case. The reality of the situation is that you are not guaranteed to remain in your house for the duration of your divorce. More than likely you or your Co-parent or spouse will be asked to leave the home at some point. When that occurs, there is no guarantee that you will be able to access the home again. For that reason, you will be leaving a lot to chance if you were to leave the home without having a good idea of the property which is included in your home.
For that reason, I recommend looking at all property that you own before beginning your case. There is no use in avoiding consideration of these issues. You need to begin considering them as soon as possible to avoid losing out on the property that otherwise should and would be considered for division in the divorce. Start to think about how you can protect yourself at the beginning of a case before it is too late. They need to be thinking proactively at the beginning of a case because there is no guarantee that all your property will be accounted for once your case removes into its later stages.
Another important point of this discussion is that A family court judge will need you to file an inventory and appraisement at the beginning of your case anyways. So, you might as well utilize that to your advantage and do a thorough and accurate job of categorizing and evaluating your property as soon as you can. there is no disadvantage 2 taking a proactive attitude and approach towards the subject. Even though your retirement might not happen for many years it is still incredibly important for you to look at this subject as one of extreme importance for you and your family. Do not look at this subject as one that you can wait on. Rather, locate your retirement savings as something that has an opportunity to become one of your most important resources as you age and enter your golden years.
Dividing retirement savings in a Texas divorce
Many different types of retirement savings may be relevant in your case. You should speak with your attorney at the beginning of your divorce about not only how much you have in retirement savings but where the retirement savings come from. It can make a tremendous difference if the retirement savings are from an individual retirement account, 401K, military retirement savings, or another type of pension plan. State and federal laws can come into play and can tremendously impact your case. As a result, you should make sure your attorney is well versed in the area of your case that is most relevant.
The basics of dividing retirement in a Texas divorce or that the portion of the retirement benefits accrued during your marriage are considered to be Community property. This would mean that if you have been married for a significant period that a huge chunk of your retirement savings would be eligible for division in the divorce. This is very important given that retirement savings may end up being one of the most valuable assets in your entire divorce case.
When it comes to government retirement plans different considerations need to be made in terms of how the retirement asset will be divided. Since these plans do not allow you to build up a certain sum of money within an account, the calculation would be different. Government accounts R like pensions and that they pay you a defined benefit at the time of your retirement. For this reason, it is difficult to put a specific value on these types of accounts. The calculation and consideration for this topic mean that you need to figure out first if your spouse is even eligible to receive a portion of your retirement benefits.
For example, if you are a military service member then your spouse would need to have been married to you for at least 10 years concurrent with ten years of military service to even be eligible for a portion of your retirement benefits. Even then, he or she may not be eligible for direct payment of those military benefits unless he or she has been married to you for over 20 years. It is difficult to prepare for circumstances like these within a divorce. This is all the more reason to make sure you have an experienced family law attorney by your side in your divorce case.
There is too much at stake in a divorce where retirement benefits are in play for you to consider not being represented. Rather, I would consider the long-term implications of a divorce on your financial well-being now and in the future and would recommend you speak to an attorney who has experience handling circumstances regarding divorce and retirement benefits. The difference can mean hundreds of thousands of dollars going one way or the other in a divorce case.
In closing, while retirement benefits may not be the most exciting topic in your day-to-day life it surely is an important subject about your divorce case. You will want to make sure that you are not only prepared for how to divide up this property but have a plan in mind on how to negotiate through all of the areas of your Community property division. When you can be intentional in goal-oriented in this area of your case you will be well-positioned no matter what your specific circumstances are.
Question about the material contained in today's blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained in today's blog post please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free of charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law as well as about how your family circumstances may be impacted by the filing of a divorce or child custody case.