What steps do you need to take in regard to your pension when you are going through a divorce. It doesn’t matter if you were the one to file for divorce or if your spouse was. Either way, your pension is in play when community property is being divided up between you and your spouse. While your individual circumstances will dictate whether or not your pension will be divided, you should be aware of the factors that are in play when discussing pension division in a Texas divorce.
What steps should you take when you are going through a divorce?
Nobody is going to argue that a divorce is one of the toughest processes that you will ever have to undertake in your life. It is unenviable to have to go through the emotional turmoil that is associated with divorce. It is also incredibly difficult to begin to untangle your life from your spouse’s. After all- you had planned on building one life with this person and are now going your separate ways. That will be emotionally, logistically and often times financially difficult.
If you have a pension through your employer it is likely that you are a government employee of some kind. Whether a firefighter, police officer or city employee your pension has to have been one of the main selling points as to why you wanted to work in that field in the first place. Sure, public sector employees don’t make the most money compared to those of us who work in the private sector, but the job security coupled with the retirement benefits that you have likely outweighed all the reasons why that job may seem less desirable
From my experience the powers that be who control your pension plan will do the best that they can to make sure that your experience in dealing with your pension goes off without a hitch. Your pension plan cannot give you legal advice so you need to make sure that you have an attorney available to you to guide you in deciding what you want to do in your divorce. The important thing to remember is that you have options and you should consider all of them before making decisions about what to do.
Get in touch with your pension plan as soon as you are able to
Once you file your petition for divorce or file the Answer in response to your spouse’s petition for divorce, you need to get in contact with your employer’s pension plan. The pension plan can assist you in walking you through the next steps of what you will need to do in relation to the plan and how the plan’s benefits can be divided in your divorce, potentially.
It is important for you to be able to understand what benefits are available to you in the pension. Specific documents may need to be filled out at the beginning of your case in order to make the actual division of the pension easier at the end of the divorce. No formal division occurs during the divorce and will only occur pending the results of a mediation or trial towards the back end of your case. However, the time to start planning for this should begin as soon as your divorce has started.
Your pension counts as community property
Any contributions or benefits that accrued within your pension that occurred during the course of your marriage will count as community property. Thus, they are divisible in the divorce. A lot of people have a hard time understanding this point because your pension is not something that you can reach out and grab but it is an asset and something that is very valuable to you. Your spouse will likely have a claim on the community property portion of the pension.
The pension itself does not do anything with division of the pension until it receives instruction from a court. It is bound by the community property laws of Texas and what the court instructs it to do. If you and your spouse can negotiate a settlement in this regard that can go a long way towards creating a compromise that suits both you and your spouse. Otherwise, you may end up having to deal with an outcome created by a judge that does not work as well for either of you.
Divorces can take longer to complete than you may have anticipated
The divorce process in Texas is designed to be long enough where you think twice about getting the divorce, and short enough to where you will not spend your entire life or your entire bank account on legally ending your marriage. The shortest that your divorce can take is two months. Some divorces take closer to a year. Most divorces are done in between 4-6 months. Factors like whether or not you have kids, whether there is a lot of community property that needs to be divided and the degree to which there is acrimony between you and your spouse can contribute to how long or how short your divorce actually will end up being.
If you and your spouse both have retirement savings available to you then the chances of your pension having to be divided up decrease. Especially if you are younger persons going through divorce your spouse may have other goals in mind as far as dividing up property. For instance, if your spouse ends up with primary custody of the kids then she may want to keep the house in the divorce. You keep your pension and she keeps the house is an agreement that I have seen many spouses arrive at in their divorce.
Another example of a situation where you may not be at much risk for having to divide your pension up in a divorce is one where your pension has not been contributed to for very long or a case where your marriage has been short. Therefore, with very little money in play your spouse may choose to move on to discuss other areas of the community estate with you.
The other thing that I think is relevant when discussing this topic is that if your pension is not divided up in the final decree of divorce then your spouse cannot come back and attempt to divide it up later in a subsequent legal case. He or she will get one bite at the apple, so to speak. The divorce decree must be very clear as far as how your pension will be divided up, if it will be divided up at all.
What is a domestic relations order (DRO)?
If the court has divided up your pension in some fashion, per your final decree of divorce, and you all want your pension plan to make direct payments to your spouse then the court will need to sign a separate order at the time of your divorce called a Domestic Relations Order (DRO). The DRO must be compatible with your pension plan since the pension plan administrator cannot always divide your pension plan exactly according to the way that you all decided it should be in your divorce.
Your attorney should ask the pension plan administrator for instructions on how the domestic relations order should be drafted to make sure that there are no problems in getting your spouse their portion of pension once your divorce has concluded. They will probably have instructions or even a draft of a Domestic Relations Order that they can follow when it comes time to create the actual order that resulted from your divorce.
The problem that you do not want to encounter is a situation where the pension plan rejects your order and you have to start all over again from scratch. Worse yet is a situation where the plan that you came up with in your divorce does not work with what your pension can do as far as dividing up your plan and paying your spouse. This is a messy situation that is not easily fixed. However, if you work with your pension plan early in the divorce and then communicate well with your opposing attorney in the divorce you can avoid most of these potential pitfalls.
Talk to the pension plan in advance of drafting your order and they may even have a form that you can use to draft the order. There are various state laws that need to be met when dividing up a pension plan as well as individual requirements of your specific plan where you will need to accommodate them. For instance, if your calculations inside the DRO or the divorce decree are inaccurate then your pension may reject the proposed order that your attorney sends to them.
Do you need to file your domestic relations order with your pension plan?
In most circumstances you will need to take a certified copy of your domestic relations order and then file it with your pension plan. This means that once the order is signed by the judge your attorney should send the certified copy of the order to the pension plan offices along with a copy of your final decree of divorce.
The pension plan will then receive the certified copy of the domestic relations order and will begin to review what has been submitted to them. What they are looking for is whether or not it meets all the criteria under state law and your specific pension plan guidelines. If you used the form that was provided to you by the pension plan, then you should be in good shape. Once the review is complete the pension plan will contact both you and your spouse in writing to let you all know if the order is accepted.
How long does this review process take?
It depends on the pension plan administrators and how many other people are ahead of you in the line to have their orders reviewed. From my experience these folks mean well and will do the best they can but it will not get done overnight. If you want to have the domestic relations order ready by the end of your divorce it needs to be submitted to the judge early for his signature and then submittal to the pension plan itself.
Usually during the waiting period any amounts of money that would be paid to your spouse will not go to you but will end up in a separate account to be held for your ex-spouse. Once the order is approved those benefits that had been held will be released to your ex-spouse. All in all, you need to contact your pension plan administrator to get the information you need to make sure that your order is acceptable to the plan. Your pension may have one person who deals with questions related to divorced persons getting these orders approved.
Questions about retirement and divorce? Contact the Law Office of Bryan Fagan
Going through a divorce is no fun. There are no two ways about that. You can do everything in your power to save your marriage but when it is time to file for divorce you need help to do that. Yes, you can file for divorce yourself and represent yourself in that process. However, with so much at stake- your children, your finances, your retirement, your home- it makes sense to walk with someone who has been through that process before.
The attorneys with the Law Office of Bryan Fagan are equipped to stand with you and advocate on behalf of you and your rights. Our attorneys are in the courtrooms of southeast Texas doing exactly that. If you want to speak with an experienced attorney who knows what you are going through and knows how to help, please contact our office today. We offer free of charge consultations six days a week here in our office where we can answer your questions and provide you with direct feedback about your specific situation.