During a Texas divorce, spouses have to split up all of their community property. Anything that you have earned or purchased during the marriage could wind up split in the divorce proceedings. Your house, your vehicles and even your furniture could be community property that you have to share with your ex.
Even if you can’t physically split the assets, you may need to figure out what they are worth and then share that value. Few of your assets will be as important to future security as your retirement account. Will you have to split that with your ex in the divorce as well, even if it is only in your name?
Retirement accounts are often at least partially marital property
The longer you have contributed to your retirement account, the better the chance that at least part of the balance will be your separate property. You will likely need to go over the financial records for your retirement account to figure out how much you had already set aside before your marriage and how much you contributed during the marriage.
The marital contributions, matching contributions made by your employer and even interest accrued on the account during your marriage may be marital property that you have to share with your spouse. In some cases, you might offer them other assets with a similar value as their share of the marital property. Sometimes, you will have no choice but to divide the account.
You don’t have to pay penalties when you divide your retirement
If you make an early withdrawal from your retirement savings, there may be penalties and taxes assessed. You won’t have to worry about those financial penalties if you divide your retirement savings account with a court-approved qualified domestic relations order (QDRO).
Once you have a court-approved settlement or a property division order, you can have the financial professional who manages the account split part of the existing balance off into a new account for the spouse receiving a portion of the retirement savings. This whole process can take place without triggering any financial penalties if managed properly.
Learning about different parts of the property division process will make it easier for you to plan for your future during a Texas divorce.