If you’ve worked for a company or public entity for a significant period, it’s quite possible that you’re entitled to a pension when you retire. However, if you’re considering a divorce in Texas, you should understand the effect that divorce can have on your ability to collect your full pension. Below is an overview of the ways in which a divorce may affect your pension in Texas. If you have additional questions, please contact a property division lawyer for assistance.
Texas is a Community Property State
Texas is a community property state, which means that both spouses own property acquired during the marriage. Property that one spouse inherits or is gifted during the marriage, however, is considered that spouse’s separate property, and it is not subject to division upon divorce. Property that a spouse acquired before the marriage is also considered separate property. Therefore, pension funds earned after marriage are considered community property unless an exception applies.
The Property Division Process in Texas
After the court classifies your property as either separate or community property, it begins the process of dividing community property between you and your spouse. Usually, Texas courts set pensions aside until the end of the property division process in order to first consider the amount of other community property awarded to a spouse. When dividing community property, including pensions, Texas courts consider multiple factors to ensure that the property division result is fair and just. Factors considered include:
- The length of marriage,
- Each spouse’s age,
- Each spouse’s earning capacity and education level,
- Whether one spouse is the primary caregiver of children,
- The value of any separate property, and
- Fault in the breakup of the marriage.
Qualified Domestic Relations Orders in Texas
Once the court determines the amount of your pension to allocate to your spouse, it executes a Qualified Domestic Relations Order (“QDRO”). The QDRO is then delivered to the pension plan administrator. In order to be valid, the QDRO must contain specific information, including:
- The addresses of both spouses,
- The names of each pension plan to which the QDRO applies,
- The amount to be paid to your spouse,
- The number of payments the spouse will receive, and
- The time period to which the QDRO applies.
Retirement Account Valuation
Most people going through a divorce will not have their property divided by the court but will reach an agreement either in mediation or through an informal settlement process. It is important that you and your attorney know the difference between different retirement plans because the true value of a retirement account is greatly affected by the form the account takes. A 401(k) is not the same as a pension, which is different from a Roth IRA. It is important that you and your attorney know the difference between these accounts and the proper way to value them, in order to make sure that your interests are protected.
Contact an Attorney Today
If you are seeking a divorce in Texas, you need an aggressive and experienced divorce attorney on your side. At Youngberg Law Firm, in addition to helping you navigate your Texas divorce, attorney Mike Youngberg will negotiate on your behalf during the property division process, taking the steps necessary to ensure that you come away with a reasonable and just property division agreement. In addition, our talented Texas attorney can help you with issues like child custody, child support, modifications of existing orders, enforcements, characterization of property, spousal maintenance, protective orders, and temporary restraining orders. Please contact us as soon as possible for a consultation.