Divorce can radically affect your future in both the short term and the long term. Not only will you likely have lifestyle changes and financial implications to consider soon after your divorce, but you may also have to rethink your retirement plans.
If you or your spouse made contributions to a retirement account during the course of your marriage, the matter of handling those accounts is something you must address during the divorce process. Understanding how exactly the Texas courts view retirement accounts for married couples will help you plan your next steps and your future.
The effect of community property laws on retirement accounts
Texas is a community property state when it comes to matters of asset distribution for divorcing couples, and that applies to retirement accounts as well. This means that all contributions made to a retirement account during the course of a marriage are shared property of both spouses, regardless of whose name is on the account or who made the contribution. The result is that the court will divide retirement assets evenly between spouses, even if one individual made significantly greater contributions than the other.
Your options for protecting retirement assets in a divorce
The best option for protecting your retirement assets is to have an existing prenuptial or postnuptial agreement in place that states what will become of community retirement accounts. If you and your spouse do not have such a written agreement, you can undergo mediation in which an experienced mediator will help facilitate negotiations toward a mutually beneficial arrangement.
If you and your spouse do not reach an agreement as to the fate of your community retirement accounts, then the standard procedures for dividing community property will take place. Mediation or arbitration can be strong options for coming to an arrangement outside of court.