Retirement savings. Two words that, when put together, are about as mundane and uninteresting as possible. When you receive an email invitation to your company’s 401K Lunch and Learn you may go for the lunch. However, your brain is anywhere but that room. That said, retirement is important even if it is uninteresting. Ask any person who is spending their golden years working a job he doesn’t like. Retirement matters. It especially matters in a situation where your spouse stands to receive part of your retirement in a divorce.
Sharing your retirement savings was fine with you when you and your spouse had a happy marriage. However, now that the marriage is nearing its end you are not a big fan of splitting your retirement with her. Is there anything you can do to prevent your retirement savings from being divided up between you and your spouse? What are the issues that you need to be aware of as you begin preparing for a divorce? These are the subjects we are going to tackle in today’s blog post from the Law Office of Bryan Fagan.
Property division in a Texas divorce
The subject of dividing property in a divorce is complex. This doesn’t mean that you won’t be able to learn enough to prepare for your case. It also doesn’t mean that you shouldn’t put forth much effort to prepare just because something is difficult. Rather, spending as much time as you are able when preparing for property division is sensible. It is difficult to modify a property division component to your divorce. That doesn’t mean that it can’t be done. However, do not assume that you will be able to correct any mistakes made in the future.
Rather, the time is now as far as preparing for the division of your property in a divorce. Feeling confident and getting divorced typically do not go hand in hand. However, being prepared and going through a divorce also do not go hand in hand. If you can prepare for the property division component of your divorce, then you are light years ahead of many people who get divorced.
Fortunately for you, the information that would be most helpful to you is available to you at no cost. The attorneys with the Law Office of Bryan Fagan offer free of charge consultations six days a week in person, over the phone, and via video. Talking with one of our attorneys costs you nothing. Additionally, the information you receive in a short amount of time helps you to gain a valuable perspective on your case both now and in the future.
Community property in a Texas divorce
How property is divided in Texas divorce means understanding community property law. Community property refers to the methods Texas courts divide property because of a divorce. A presumption holds in Texas that all property at the outset of your divorce is presumed to be community property. This is important because community property is subject to division by a Texas family court judge. This property includes intangible items like your retirement savings. Does this mean that your retirement savings must be divided in the divorce?
Just because there is a presumption in favor of community property does not mean that your retirement savings will certainly be divided in the divorce. As we will see, there are very few sure things when it comes to dividing property in a divorce case. However, being prepared for the possible division of your property is something worth looking into. This is certainly true if any portion of your retirement savings is properly classified as community property.
Explaining community property can either be done simply or in detail. Like most subjects in the law, there is a tremendous amount of depth to this subject. For instance, the blog for the Law Office of Bryan Fagan has numerous articles and blog posts detailing this subject. We welcome you to read those blog posts to learn more about this topic. However, for this blog post, we will be discussing retirement division on a general level.
Understanding your circumstances is key to retirement savings division
When we talk about dividing your retirement benefits there are a handful of key attributes understand. One of the most important attributes is knowing when you started saving within your retirement plan. Next, the date on which you were married is also important. Finally, understanding any crossover between your marriage and your retirement savings completes the picture.
Their retirement savings accrued during your marriage is likely to be community property. This community property represents the divisible portion of your retirement account. Understanding this allows you to see what portion of your community property is subject to division in a divorce. For instance, if you’recontributing to the retirement account coincides almost completely with the period of your marriage then most if not all your retirement savings will be community property. Thus, it is important to work toward a plan based on the division of at least part of this retirement.
On the other hand, if you only recently started contributing to your retirement or if most of your retirement was contributed to before your marriage then relatively little of your retirement falls within the category of community property. This is why your circumstances matter so much when talking about the division of your community estate. It would be very difficult to answer this question because of these factors.
Your age and division of your retirement account
One of the most important factors when it comes to dividing your retirement is related to your age. The older you are the more important your retirement savings is to you. This is not to say that young people cannot value their retirement. However, what it does mean is that your age determines your outlook towards retirement in large part. Older people are closer to retirement than younger people. With that in mind, they are more likely to have a strong opinion about how their retirement is divided.
By the same token, the amount of retirement savings you have earned also matters. An older person may have contributed more to retirement than a younger person has. However, this is not always true. If you are an older person going through a divorce, then we should look at your retirement. The more you have contributed the more attention will be paid to this subject. Having contributed little to retirement means your focus needs to be on saving for retirement rather than protecting what you have already saved in a divorce.
Many people lose track of their life after divorce. So much focus is placed on the case itself that life after divorce is overlooked. This is to your detriment. Although it sometimes does not feel this way the reality is that your life after the divorce is a longer time than your life during the divorce. Having an eye towards the rest of your life after the divorce is the key to understanding the important factors in your case.
Organizing your community property estate
One of the important aspects of preparing for divorce relates to your organization. The more work you can perform on your own the better off you will be. Not preparing on your own for the divorce means placing a lot of responsibility on the shoulders of your attorney and their staff. Not only can this cost you time in the divorce, but you have to pay the attorney and their staff for having worked.
On top of that, no one understands your case better than you and your spouse. This is true no matter how much the two of you disagree on any one subject. The idea of negotiating with your spouse may seem like a cruel and unusual punishment. After all, the two of you are getting a divorce. Isn’t that indication enough that the two of you are not able to agree with one another on much of anything?
While it may be true that you and your spouse have major communication problems this does not mean that you would not be able to work with one another to help settle your case. The preparation put into your case allows you to present a more coherent argument to the judge. This is true concerning the division of your retirement accounts or any subject in your divorce.
Determine what property is likely to be divided in the divorce
Depending upon your age, the percentage of your retirement that is community property may be quite high. The amount of community property in your case is always tied to the length of your marriage and your age. These factors will go a long way towards helping you figure out what portion of retirement benefits are in play as far as division is concerned. Older people who have been married a long time and have been saving for retirement almost as long have much of their retirement savings as community property. On the other hand, younger people who have only recently decided to start saving for retirement will not have much in the way of community property subject to division and divorce.
This is where doing your homework will make a difference in your case. Look at the date of your marriage and determine how much retirement savings you had at that time. Thankfully, with so much of our retirement savings available online looking up statements is not difficult. It does take effort, however. You should be able to look at your accounts and see how much of your retirement savings were cumulated before your marriage. This would be the separate property portion of the account. Separate property is not divisible in a divorce.
Developing a strategy for property division
Once you have a better idea about what portion of your retirement is divisible in the divorce you can begin to develop a strategy for community property division. The more detailed your preparation was for this stage of your case the better off you will be. Your spouse will be able to tell if you simply threw together a plan for the division of your property at the last minute. On the other hand, more thought and consideration paid to this subject leaves you with a much better starting point as far as how to divide not only your retirement savings but your other community property.
Where do you stand at the end of your divorce?
In a circumstance where a family court judge must divide your retirement savings, you need to approach the case from their perspective. A judge does not see your retirement savings as being either yours or your spouse’s. The name on the account is less important than the way that the property was accumulated. Whether the property is community property or separate property is what matters to the judge.
With that said, a judge will divide community property in a way that is just and right. A just and right division of your community estate seeks to take into consideration several relevant factors. We can begin by discussing your age and that of your spouse. As mentioned, a moment ago, older people have a greater need for retirement savings than younger people. This is because younger people typically have more earning years in front of them than older people. Therefore, if your spouse is in their golden years then plan on this being a factor in their favor when it comes to receiving a portion of your retirement savings.
The degree to which your spouse has saved for retirement also matters. An older spouse who has nothing in retirement stands a greater chance of receiving a larger portion of your retirement savings. Again, the retirement savings must be part of the community estate. Even the most “deserving” of spouses cannot receive your separate property in a divorce.
Be creative when negotiating a division of community property
What many people are unaware of as they negotiate a division of their community estate is that most property divisions in Texas are negotiated by spouses. This means you should not expect a judge to be the primary decider of the issues related to community property division. Rather, your spouse and you have opportunities in the case to negotiate a division of the property yourselves. Getting back to what we talked about earlier, this place places a heavy emphasis on your ability to negotiate with your spouse. Setting aside your differences to work towards an amicable resolution is a great strategy to employ.
The more creative you can be with your community property division the better outcome you are likely to encounter. Options are good. We all want to have options in our lives. From there, we make better decisions for ourselves this holds in a divorce, as well. The better your options are the more likely you are to be satisfied when your divorce comes to an end.
This places a heavy emphasis on creative problem-solving in the context of your divorce. The more creative you and your spouse are the better the outcome for both of you. Think about community property division like the two of you are sitting with poker chips at opposite ends of a table. The purpose of a divorce is to take all those poker chips and put them in the middle of the table. These chips represent your community property. It is up to the two of you how those poker chips are divided. There are countless ways to divide your property. What it takes is creativity and attention to detail.
Final thoughts on dividing community property and retirement benefits
Even if most or all of your retirement savings are community property does not mean that it is a given that your retirement savings are going to be split. Your specific circumstances help determine how the retirement savings are divided, if at all. The degree to which you place importance on your retirement savings will go a long way toward helping you determine how the savings are divided.
If your retirement savings are incredibly important to you then you must be willing to give property elsewhere in hopes of retaining as much of your retirement savings as possible. Start thinking about the cash you have on hand, your home, and other investments in real property that you own. What are you willing to give up? Through negotiation, you may even decide to allow your spouse to retain part of your separate estate to keep your retirement benefits. Everything is in play when you can negotiate with your spouse.
Questions 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. Interested in learning more about how your family is impacted by the material in this blog post? Contact us today.
Evan Hochschild was raised in Houston, TX and graduated from Cypress Creek High School. He went on to graduate from Southwestern University in Georgetown, TX with an undergraduate degree in Political Science. While in college, Evan was a four-year letterman on the Cross Country team.
Following in the footsteps of his grandfather and uncle before him, Evan attended law school after he completed in his undergraduate studies. He graduated from St. Mary’s University School of Law and has practiced in a variety of areas in the law- including family law.
Mr. Hochschild is guided by principles which place the interests of clients first. Additionally, Evan seeks to provide information and support for his clients with the heart of a teacher.
Evan and his wife have four small children together. He enjoys afternoons out and about with his family, teaching Sunday school at his church and exercising. A veteran attorney of fourteen years, Mr. Hochschild excels in communicating complex ideas in family law simply and directly.
