When parties enter into divorce proceedings in Texas it is not only the children, the house and their bank accounts that are issue. It’s also their retirement accounts. Why are Retirement Funds Important in a Texas Divorce?
The Houston divorce attorneys with the Law Office of Bryan Fagan, PLLC are well versed in the laws of Texas and how they can impact your finances. Now and in the future, as a divorce is getting underway. This blog post will detail the ins and outs of how the Texas Family Code handles retirement benefits for people going through a divorce. Especially Why are Retirement Funds Important in a Texas Divorce?
Community Property and Retirement Accounts
Texas law holds that equity that has been accumulated and contributed to during a marriage in a pension fund, IRA, 401K savings account or any other type of retirement account. It is considered to be community property.
This means that at the end of a divorce, absent any extenuating circumstances, your soon to be ex-spouse has a right under State law. To a portion of what was accumulated and contributed to during the course of your marriage.
In this way
Retirement accounts are viewed similarly to income by Courts and will be treated as such. It does not matter whose name is on the retirement account(s), who is listed as the beneficiary, etc. Regardless of whose name is on the account, they are subject to being divided up by a Court.
Subject to Division
As previously mentioned, the amount in those accounts that are subject to division depends in large part upon when they were started. If they were in existence before the date of marriage then those amounts contributed and any equity therein is off limits. And off limits for the Court to consider as community property.
The real work for you and your attorney will be figuring out how much is at issue. And, if there is any disagreement between the parties on this number, being able to prove how you arrived at the figures that you have.
The reason
The reason the law in Texas considers the retirement contributions during a marriage to be community property is straightforward. It is assumed that the money contributed to these accounts is from the income a spouse earns from their job. This income is considered community property and therefore the contributions made to retirement accounts is also considered to be community property.
Military Retirement
If you or your spouse served in the United States military, your situation will be handled a differently. Reason being is that military personnel’s retirement is based on a points system. The same law that applies generally to all retirement accounts in the divorce context apply to military retirement accounts.
However, those points accumulated prior to the marriage are considered off limits. They are not part of the community estate subject to division by a Court. It is only those points accumulated during a marriage that are subject to being split. Between the parties upon the termination of the marriage.
Different Rules Apply to Certain Professions
Other fields of employment that have specific rules associated with retirement benefits include many jobs that are in public interest- teachers, firefighters, police officers, etc.
Currently a bill has just passed through the Texas State House of Representatives which makes changes to the pension plan. This is for many City of Houston employees, including firemen and police officers.
Qualified Domestic Relations Orders
At the conclusion of a divorce in Texas, one of the parties will draft what is called a Qualified Domestic Relations Order or QDRO. This Order basically re-states the specifics of the Court’s order in a format that will be reviewed by the plan administrator. For whichever plan or plans are to be divided.
The plan administrator’s job is to review the QDRO and ensure that it satisfies the requirements set forth in the rules for the retirement plan itself. And also federal laws that deal in retirement plans. Once reviewed and approved, a Texas family law attorney can assist you. In having those funds wired into the bank account that you have selected. A QDRO will help the parties avoid tax penalties for early disbursement of funds, as well.
If you’re curious
If there is some way to avoid having to divide up a retirement plan, the answer is yes. It is not always simple but negotiating with your soon to be ex-spouse on the issues at hand is always something that the attorneys with the Law Office of Bryan Fagan, PLLC recommend.
If both spouses have retirement plans
It is not uncommon for them to be left alone and not divided up. Even if this is not the case and only one party has a retirement account. The account holding spouse may be able to give up another asset that they ordinarily would not have had to. In order to keep control of their retirement account.
To be sure
Retirement accounts are a critical aspect of any Texas divorce case. These accounts represent a great deal of effort, diligence and discipline. They are not easily parted with, nor should they be. If you have any questions about what you are entitled to in a divorce or simply don’t know what your spouse has in terms of retirement funds, the attorneys with the Law Office of Bryan Fagan, PLLC are ready and able to assist you with your questions or concerns.
Our legal team understands the difficulties that divorce can bring to a family.
Partnering with advocates who are trustworthy and effective is the best advantage a person can give themselves as they begin walking down the road towards a divorce. The Law Office of Bryan Fagan, PLLC has attorneys available to take your call and meet with you in person- free of charge- to discuss your particular situation and how the law in Texas would apply.
Other Articles you may be interested on regarding retirement accounts
- Can I Keep My Retirement in a Texas Divorce?
- Texas Divorce and Retirement & Employment Benefits by the Numbers
- Is Social Security Considered Separate Property in a Texas Divorce?
- Will My Spouse Get Part of My Retirement in Our Texas Divorce?
- Dividing Property in a Texas Divorce – The Just and Right Division
- Why is Separate Property Important and How to Keep it Separate in a Texas Divorce?
- What Wikipedia Can’t Tell you About Texas Divorce and Marital Property Division
- Texas Divorce Property Division Enforcement
- Separate Property in a Texas Divorce?
- Does it Matter Whose Name is on Title or Deed of Property in a Divorce in Texas?
Frequently Asked Questions
How are retirement accounts split in a divorce in Texas?
In Texas, retirement accounts accrued during the marriage are typically considered community property and are therefore subject to division between both parties in a divorce.
Is my ex wife entitled to my retirement in Texas?
Yes, if the retirement was earned during the marriage, your ex-wife may be entitled to a portion of it as it is usually considered community property in Texas.
Are retirement benefits community property in Texas?
Retirement benefits accrued during the marriage are generally considered community property in Texas and are subject to division upon divorce.
What assets are protected in a divorce in Texas?
In a Texas divorce, separate property which includes assets owned before the marriage, gifts, and inheritances received solely by one spouse, are typically protected from division.
Bryan Fagan, a native of Atascocita, Texas, is a dedicated family law attorney inspired by John Grisham’s “The Pelican Brief.” He is the first lawyer in his family, which includes two adopted brothers. Bryan’s commitment to family is personal and professional; he cared for his grandmother with Alzheimer’s while completing his degree and attended the South Texas College of Law at night.
Married with three children, Bryan’s personal experiences enrich his understanding of family dynamics, which is central to his legal practice. He specializes in family law, offering innovative and efficient legal services. A certified member of the College of the State Bar of Texas, Bryan is part of an elite group of legal professionals committed to ongoing education and high-level expertise.
His legal practice covers divorce, custody disputes, property disputes, adoption, paternity, and mediation. Bryan is also experienced in drafting marital property agreements. He leads a team dedicated to complex family law cases and protecting families from false CPS allegations.
Based in Houston, Bryan is active in the Houston Family Law Sector of the Houston Bar Association and various family law groups in Texas. His deep understanding of family values and his professional dedication make him a compassionate advocate for families navigating Texas family law.
