Retirement Plans and Divorce
Preparing for a divorce is not an easy process. After all, both parties likely spent years sharing virtually everything, including finances. This leads to certain difficulties in dividing assets for which a Divorce lawyer in Conroe may be almost indispensible. Retirement plans are no exception to such difficulties, but the following should provide you with some basic information on how they are treated.
Community Property and Retirement Plans
While many of the assets acquired before and during a marriage by both parties are generally comingled—as in shared savings accounts, etc.—retirement assets are, by their nature, kept separate. This does not mean, however, that each party simply retains their own retirement plans. A Divorce lawyer in Conroe will tell you that as a community property state Texas regards retirement accounts as jointly held.
When dividing assets, then, this would suggest that each spouse becomes vested in 50% of the shares of both retirement accounts. While in a very rough sense this is true, Texas family courts take into consideration what is termed “disproportionate allocation.” In other words, the court will look at the earning power of each party, as well as other matters, such as who retains majority custody of the children and any significant health problems. A Divorce lawyer in Conroe can provide you with a reasoned assessment of how your retirement account may be affected.
Retirement Earned Prior to, and During Marriage
One factor that your Divorce lawyer in Conroe knows will be weighed by the courts is what portion of a retirement account was acquired before the marriage. Generally speaking, the assets that fall under community property are those acquired during the marriage, so one might expect that only that part of retirement earned after marriage will be affected. However, while a formula may be used to calculate this, one should keep in mind that certain issues make for some uncertainty in making this distinction. For instance, the funds held in the account prior to marriage are commingled with those held during it, which makes for some difficulty is determining what portion of interest is affected.
Since retirement plans are penalized when funds are withdrawn early, for 401K, IRA, and certain other plans a Qualified Domestic Relations Order (QDRO) will need to be drawn. A Divorce lawyer in Conroe can help you prepare this document, which is then sent to the plan administrator. The QDRO gives the other party in a divorce an ownership stake in the retirement plan as proscribed by the court.
If You Need Help, Call a Divorce lawyer in Conroe
If you have questions about retirement plans or other divorce matters, speak with a Divorce lawyer in Conroe who can provide you with quality legal guidance procured from years of experience. Call Peterson Law Group today to arrange a consultation at 936-337-4681.