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Splitting retirement plans during divorce: Points to consider

On Behalf of | Mar 29, 2022 | Family Law

Courts determine how retirement benefits are divided in a Texas divorce based on time periods surrounding the instruments. Read on the discover the basics of retirement benefits in divorce court, as well as about QDROs and other relevant information.

Do benefits assets belong to both spouses?

Where benefit ownership lands rely on when contributions were made to the account. Contributions put into the account — separate property — before the union belongs to the original account holder. Any contributions made throughout the marriage the court deems community property.

Does the length of the marriage matter?

That depends on the account type. Most savings plans, like the 401(k), are on the table for division regardless of the duration. (These plans are not guaranteed to be split 50-50 either.)

Social security spousal benefits, pensions and military retirement are subject to different rules. The division may also be gauged by when you are eligible to receive benefits.

Can I stop my soon-to-be-ex from cashing out benefits before the divorce settlement?

Many Texas counties put what’s called “standing orders” into effect after a divorce is filed. The orders prevent either party from selling or taking out funds from their retirement accounts.

If there is no such order in your jurisdiction, ask the court for a temporary restraining order. Under the order, family law dictates no one can change the status of the accounts without being in contempt.

What if plan administrators do not send my mandated share of the accounts?

A Qualified Domestic Relations Order (“QDRO”) is a court document that directs a former spouse’s employer to divide benefits according to the decree. You can get a QDRO at any time before or after the divorce decree gets signed.

Dividing marital assets often turns volatile, forcing the court to make final decisions. Avoid this. Finding ways to reach amicable conclusions for dividing benefits has to be a priority.