Understanding how courts divide a pension in Texas divorce

On Behalf of | Oct 27, 2017 | Property Division

For many couples, retirement accounts are substantial assets. In fact, the amount you’ve saved or invested over your working years for your retirement could be your biggest financial asset, other than your house. After all, you’re hoping to live off of those savings or investments for several decades. That means, among other considerations, that your pension and retirement accounts will in all likelihood be split up if you divorce.

You may think that your pension is your own. After all, it’s in only your name, in an account created by your employer. However, in a divorce, it won’t matter if you were the only one with a pension or if you stayed at home to raise the kids. Both spouses will generally receive a fair share of any retirement funds or pension.

Texas doesn’t care whose name is on the account

When it comes to determining the most fair and equitable way to divide up retirement assets and pension accounts, Texas family court won’t care about whose job the pension comes from. What will matter is when the pension funds accrued. Generally, deposits made during your marriage end up subject to division, while those from before your marriage or after filing for divorce aren’t.

Any income or benefits, even employer fund matching, earned or accrued during marriage are part of your marital assets or marital estate. Regardless of who made more money, those assets belong to both spouses. The courts will divide them in a manner that is as fair and equitable as possible, though the court will start with the presumption that assets acquired during the course of the marriage are community property, and so subject to equal division.

Dividing a pension can become complicated

In some cases, like 401(k) or Roth IRA accounts, the process of splitting retirement funds is straightforward. Once you determine how much accrued during your marriage, the courts include that amount in the various assets they divide. That could mean splitting the accounts between both spouses or offsetting the value of the account with other assets. Pensions, however, can be a little more complicated.

In some cases, the courts may order that each payment from the pension fund get split between both spouses. That can be a great way to provide ongoing spousal support to an ex without needing additional income. However, it could impact your ability to retire when you intended. In other cases, the courts may allow one spouse to retain the full pension by awarding assets of comparable value to the other spouse in the property division process.

You and your former spouse may come to an agreement about how to handle your pension, or you may need to leave that decision up to the courts. Either way, chances are that unless you have a prenuptial agreement dealing with your pension, it will end up divided.

An experienced family law attorney can answer your questions regarding pension assets, and if necessary, advise you concerning your legal options.