Asset Division in a Texas Divorce Jeopardized My Retirement

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I couldn’t take it anymore. My marriage was in shambles and I needed out. Losing my partner was bad enough, but then I realized my savings was unprotected. I had worked my whole life saving for retirement. The thought of losing everything in asset division to my ex was terrifying. 

Man dividing blocks with money drawn on them on a table.
It’s vital that you consult with an attorney before you lose your retirement. Photo by Haotk

A divorce is emotionally and physically draining. There are so many steps: hearings, arbitrations, legal motions, and meetings with lawyers. Additionally, you’ll have to relive all of the negative feelings that caused the separation. For me, the scariest part was dividing assets.

Anyone who has gone through the process with a Texas divorce judge knows your goal is to be fair but also to protect as much of your money as possible. When I started my divorce, I talked to a lawyer and learned how to protect my nest egg. Here are a few critical things that I’m glad I knew before I went to court.

How Property Division Works In A Texas Divorce

When it comes to divorce, Texas is one of the nine community property states. State law mandates that almost all of the property you acquired during the marriage (marital property) belongs to both spouses. This applies even if only one spouse earned it. Therefore, the court will split everything equally during asset division. Only the separate property of one spouse will not be divided.

This is different from equitable distribution states. During equitable distribution, the judge will split marital property acquired during the marriage according to what they determine to be fair to both parties. Courts in these states consider factors including the standard of living, the value of property brought into the marriage by either spouse, the value of separate property owned by each party, and the financial situation of each party at the time of the divorce. Equitable distribution does not start from the presumption of a 50/50 split of marital property.

Agree On Asset Division During Divorce

My ex and I were not really on speaking terms during the process. Things were beyond difficult in my case. When it came to my IRA, 401k, and pension, it would have saved a lot of heartache if my ex and I would have been able to come to terms on how to split marital assets before going to court. This would have made the divorce easier since the judge will accept whatever asset division the two of you determine. 

If you’re like me and the two of you can’t come to an agreement on how to split marital assets, then the court will have to make the decision. Because Texas is a community property state, the court will take all money both of you accrued as marital property and divide it equally between both partners. The only thing that’s protected from property division is separate property.

These assets can be divided in the divorce:

  • Real property and real estate (including the family home, vacation home and any time-shares)
  • Financial assets such as funds in bank accounts
  • Family business
  • Debts and debt repayment obligations
  • Insurance policies
  • Tax refunds and carryover tax losses

Even if both of you have agreed that one spouse will pay the debt that is in the names of both parties, the creditor can come after the other spouse for repayment if the spouse liable for the debts does not meet their debt payment obligations. An increase in the value of a business before the divorce can also be considered marital property even if only one party is the owner of the business. Income from the business itself, while you were married, can also be considered marital property which will be divided during the divorce.

Your Retirement Accounts Might Be Separate Property

Now here’s where you can save a ton of money with just a little work. In Texas, separate property is a possession that:

  • You owned before the marriage
  • You inherited either before or during the marriage
  • Was gifted to you either before or during the marriage

That means that a significant part of your retirement will be separate property. Before the asset division process, make sure you know what exactly was in your retirement account before you tied the knot. Knowing the number of shares of stocks and mutual funds as well as the dollar value of the accounts will help you. 

Remember, it’s up to you and your attorney to prove what was your personal property before the marriage. That way, you won’t have to watch half of your assets accumulated prior to the marriage vanish. 

Trust me, you will need to prepare for this process. Make sure you start gathering evidence of your assets before the marriage. I wish I had. I dug through all my files and called all of my old jobs looking for statements. 

A good way to start is by finding all documentation that proves what was yours prior to the union. That way, you can protect your savings.

It’s important to get legal advice from a qualified attorney on the evidence you need for your case to prove your separate property.

Some Retirement Assets are Community Property

Unfortunately, there are some things that you won’t be able to keep for yourself. When a couple divorces, each spouse is entitled to a part of the retirement benefits that have accrued during their marriage as these are considered marital property. 

Texas state laws specify that retirement savings like IRAs, 401ks, and pensions you earned during the marriage are to be considered community property. Therefore, it’s essential to understand that all of the cash contributions you made and gains to the account during the marriage are up for grabs. I made sure that I was not the only one putting money into accounts when I was married. That really helped me protect my retirement during the divorce.

You may even want to draw up a premarital agreement with your spouse that will include details of how assets will be divided between you and your spouse in the event of a spouse. You can also include conditions that protect you such as ensuring you’re not the only one putting money into accounts. Consult an attorney to get an understanding of your options to protect your assets.

Contact Us For A No-Cost Case Review

Divorce can put you in a difficult financial situation. Retirement assets are not the only type of assets that the court will split in a divorce. You might lose real estate, a family business, insurance policies, and other personal property that you worked hard to accumulate. A good lawyer will protect your rights and ensure you get your fair share of the assets you’ve worked so hard for.

Let the experts at Sean Lynch + Associates help you prepare for your divorce case. They have decades of experience in family law as divorce attorneys. They offer consultations. Contact them today for a no-cost case review and legal advice. And if you know someone who could use their help, share this post with them.


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