In many Texas divorce cases, the division of retirement assets is extremely important. Retirement assets and pension benefits can help ensure a more solid future, and it’s understandable that both parties will want their fair share. However, fair share does not mean simply dividing all retirement assets in half. So, how does a pension division in a divorce work?
Here, our divorce property division lawyer explains how retirement and pension divisions work in a divorce.
What Do Retirement Benefits Include?
In Texas, the law dictates that income earned during the course of a marriage is considered joint, community property. If one or both parties have acquired retirement savings in an IRA, 401K, deferred compensation account, or pension during the marriage, the money is considered joint property, no matter whose name is on the accounts.
If you or your spouse contributed to retirement savings before the marriage, those savings are considered separate property.
What About Social Security and Military Retirement?
Social security and military retirement are not always classified as community property when acquired during a marriage. In general, social security benefits are not divisible upon divorce, but when certain conditions are met, you may be entitled to up to 50% of your spouse’s benefits.
To be eligible for part of your spouse’s social security benefits, you must have been married for 10 years or longer, and the amount you receive could depend on your own work history. You also can’t be remarried since your divorce, and you must be at least 62 years old.
Dividing military retirement benefits is dependent on how long your spouse served in the military while married. Some military retirement benefits are divisible, while others are not.
How Do You Divide a Pension?
Dividing a pension can be done by one of two methods —one based on if your spouse is still employed by the employer sponsoring the pension benefit at the time of divorce and the other based on if your spouse has already retired and is receiving the pension benefit at the time of the divorce.
If your spouse is still employed at the time of divorce the court will determine the “community” portion of the pension benefit by applying a formula that divides the number of months married during employment by the number of months worked for the employer sponsoring the pension benefit at the time of divorce. This result is then multiplied by the value of the monthly pension benefit the employee spouse would receive as of the date of divorce, regardless of whether spouse is actually eligible to retire on that date.
If the spouse is already retired, the court will calculate the community portion of the pension benefit by dividing the number of months married during employment by the total number of months of employment.
How Do You Divide Other Retirement Accounts?
Some divorcing spouses agree to each keep their own retirement accounts in their own names, without dividing them. A judge will accept this sort of agreement.
You can also agree or be ordered to cash out your share, or agree or be ordered to exchange community property that is equal to your spouse’s share of retirement.
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The Information You’ll Need
Remember that in Texas, it is presumed that anything owned in the marriage is community property. If you contributed to a retirement account before marriage, it’s up to you to prove this.
You’ll need to find the appropriate documents to make your case. Find documents that show the start date of your account, the statement from the month prior to marriage, your most recent statement, and any other documentation that shows how much was in your retirement account before you were married.
Find this documentation early on in the divorce proceedings to avoid the courts assuming all retirement accounts are community property.
How to Protect Yourself
If you’re worried your spouse might withdraw funds from his or her retirement account to prevent you from getting your fair share, talk with your attorney about Texas divorce pension division.
Most counties in Texas have standing orders that go into effect automatically once a divorce is filed. These standing orders declare that neither party can withdraw funds from retirement accounts. If you live in a county without these standing orders in place, ask your divorce lawyer to file a Temporary Restraining Order with provisions preventing your husband or wife from withdrawing funds.
How Do You Receive Your Share?
Once the retirement assets have been divided, you’ll need a Qualified Domestic Relations Order (QDRO) signed by the judge. This is separate from your divorce decree, and it directs your spouse’s employer to divide the retirement benefits as the judge has ordered.
Texas Divorce Pension Division
Your retirement assets will be an important factor in determining your quality of life as you get older. Because of this, you want only the best divorce lawyer representing you. Austin divorce attorney Ben Carrasco is skilled at helping clients get their fair share of retirement assets. Give Ben a call today at (512) 320-9126 or contact him online to schedule a consultation.