When spouses in Texas decide to divorce, one of the more confusing parts of the process can be what to do about retirement benefits. Since these benefits are considered to be community property, divorce attorneys must treat them the same as any other income accumulated during the marriage and help couples divide them appropriately. Depending upon the type of retirement plan, divorce lawyers must ensure these assets are properly divided.
Retirement Benefits Are Community Property
Retirement assets in Texas are considered to be community or marital property. Even though such benefits may be in one spouse’s name, it is assumed that both spouses were contributing to them over time and are both entitled to them depending on the length of the marriage and when contributions began. Divorce attorneys point out that this law also applies to any benefits accrued during Texas residence, even after a couple moves out of state.
Different Types of Retirement Plans
Before divorce lawyers can properly assist divorcing spouses in the division of retirement funds, it is important to understand that retirement accounts pay out in different ways. Depending on personal contributions, vested interests, and job specific benefits, the division of these assets can greatly differ on a case-by-case basis. In any situation, these benefits are viewed as indirect income and must be treated as marital property to be divided upon termination of the marriage.
Some plans will provide monthly income to both spouses, while others pay in a lump sum once the named spouse reaches retirement age. Policies such as returned or forfeited contributions when an employed spouse leaves a company before becoming vested also differ depending upon the plan.
Calculating Retirement Benefits for Divorcing Spouses
Although a divorcing spouse is entitled by Texas law to a portion of their former spouse’s retirement income, divorce attorneys impress that the amount is limited to the wealth accumulated during the marriage. Divorce lawyers calculate payable amounts by determining the worth of the benefit at the time of the divorce, as opposed to when the employed spouse reaches retirement age. In this way, payments reflect the time the couple was married and retirement assets were being accrued, up to the date of the divorce. This method provides a clean separation from benefits collected during the marriage and a divorced spouse’s future benefits that will be accumulate after the divorce.
In addition, when an employee spouse leaves a company before becoming fully vested, a former spouse may be entitled to a portion of returned contributions depending on individual circumstances. All of this must be taken into reviewed by experienced divorce lawyers so there are no questions about later fund disbursal.
Divorcing couples must understand that retirement benefits in Texas are considered to be community property and are subject to division along with other marital wealth. Yet the process of dividing these funds can be complicated and require couples to work with divorce attorneys who are experienced in the proper division of marital retirement income. By using an approved formula to calculate payable benefits and considering all of the various types of retirement accounts, divorce lawyers play a critical role in dividing marital retirement income in preparation for divorce!
Garza & Elizondo, LLC
680 East St. Charles St, Suite 600 Brownsville TX 78520
1393 East Alton Gloor Blvd, Suite 12 Brownsville TX 78526