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What can a Texas divorce mean for someone’s retirement savings?

Saving for retirement requires long-term planning. People typically make small contributions to a retirement savings account for decades so that they have enough resources set aside for their comfort in their golden years. Many married couples in Texas include retirement savings in their household budgets.

For couples that choose to divorce, retirement accounts can often present a challenge when negotiating property division matters or preparing for court. One of the most common misconceptions about retirement savings is that they are generally separate property because only one spouse has their name on an account. That reality has little bearing on the outcome of the property division process during a Texas divorce.

Do people have to share their retirement savings?

One of the most common questions that people have about the division of retirement savings or pension benefits in a Texas divorce is whether those savings are part of the community property pool or if they are separate property. After all, it is typical for people to hold their retirement savings in an account potentially maintained or contributed to by their employer.

What people often fail to understand about property division during Texas divorces is that the ownership paperwork for the account isn’t what determines if it is separate property or community property. Instead, the terms of any marital agreements the spouses have signed and the dates when someone made contributions to the account will be what ultimately determines if that property is subject to division in the divorce or not.

The amounts deposited during the marriage are often subject to division in the divorce unless people specifically agreed ahead of time to treat retirement savings as separate property should the couple divorce. The same rules generally apply to pensions, including military pension benefits. What people earn during the marriage is potentially subject to division in the divorce proceedings. In fact, the dependent or lower-earning spouse may even be able to claim Social Security retirement benefits based on the other spouse’s income and contributions.

Those who understand the rules that govern the property division process during Texas divorces will have an easier time pushing for a fair outcome and will have an easier time planning for their financial future as well.