How Are Retirement Plans Divided In A Texas divorce?
Property division tends to be one of the most complex aspects of divorce, particularly for spouses with a high net worth. In many marriages, “hard assets” such as the family home are the most valuable assets, but for other couples, retirement accounts are the most valuable kind of community property.
Generally, your retirement account is categorized as community property — and is therefore divisible in a Texas divorce — if you funded the account during the course of your marriage. That is, unless you and your spouse signed a premarital or post-marital agreement stating that the retirement account should be considered separate property.
Also, if you started funding the account before you were married, then the value of the plan on the marriage date may not be subject to property division. If this is your situation, then don’t hesitate to speak to a property division lawyer about accounting for and protecting your assets.
For most kinds of retirement accounts — for example, 401(k)s and IRAs — fairly dividing the assets between spouses requires a Qualified Domestic Relations Order, or QDRO. This document is used to verify an alternate payee’s right to receive a portion of the benefits paid from a retirement plan. In other words, a QDRO can be used to name as an alternate payee the spouse who did not participate in the retirement plan.
Many family law and property division attorneys outsource the drafting of QDROs. At Setzer Law Firm, however, we provide this service to our clients, as well as negotiate on our clients’ behalf to reach a fair settlement.
If you have questions about dividing a retirement plan or pension in divorce, then our overview of retirement plan issues may prove helpful.