Retirement Asset Division
Retirement Asset Division. There?s a Formula for That.
How the court divides the retirement assets in divorce is a commonly asked question. Community property can be divided, separate property cannot. If you are unsure of the characterization of your property, you should seek assistance from a board-certified family lawyer. If you believe your spouse will contest what is in question, what is to be divided, or what constitutes the community estate, we would highly recommend you contact our team of legal experts at Scroggins Law group as soon as possible.
Property must be characterized as separate or community property before the court can divide the estate, as the court can only divide the parties? community property. The court lacks the jurisdiction to award the separate property of one spouse to the other.
Separate property is defined as property owned or claimed by the spouse before marriage, the property acquired by the spouse during marriage by gift, devise or descent and, the recovery for personal injuries sustained by the spouse during marriage, except for any recovery for loss of earning capacity during marriage.
Community property is defined as property, other than separate property, acquired by either spouse during their marriage. It is also further defined, by case law, as any property or rights acquired by one of the spouses after marriage by toil, talent, industry or another productive faculty, and as property acquired during marriage other than by gift, devise or descent that is the product of the unique, joint endeavor undertaken by the spouses.
Texas community property law governs the process of determining what portion of an employee spouse?s retirement is subject to division in a divorce.
In general, retirement benefits that accrued prior to the parties? marriage are the employee spouse?s separate property. Those that accrue during marriage are community property. There is a formula for that.
In a decree of divorce, the court shall determine the rights of both spouses in a pension, retirement plan, annuity, individual retirement account, employee stock option plan, stock option, or another form of savings, bonus, profit-sharing, or other employer plan or financial plan of an employee or a participant, regardless of whether the person is self-employed, in the nature of compensation or savings. The Texas Family Code does not require the equal division (or any division) of retirement benefits. However, division is often necessary as retirement benefits may be the most valuable or only asset in the community estate. There is a formula for that.
The question still remains? How are my retirement assets divided in a divorce?
For defined benefit plans, the method by which one determines the community property portion depends upon whether the participant is retired at the time of divorce. There is a formula for that.
In order to divide retirement and most employee benefits, Qualified Domestic Relations Orders (?QDROs?) are used in plans that are qualified under the Employee Retirement Income Security Act of 1974 (?ERISA?) and certain governmental and other plans. A QDRO is a state-issued order that relates to the provisions of child support, alimony, or marital property rights to a spouse, former spouse, child, or other dependents of a qualified retirement plan participant. QDRO?s do not apply to federal and military benefits but are applicable for teacher retirement and Texas municipal employees.
There are different equations and mathematical formulas accepted by the court to determine how retirement benefits are divided, and for the best results possible, you need experienced legal representation. Mark L. Scroggins is a Frisco family law attorney who has over 25 years of legal expertise and is a board-certified family law specialist.?Scroggins Law Group strives to provide qualified representation for North Texas residents in need of family law legal counsel. Please contact us today at 214-469-3100, of find us online at www.scrogginslawgroup.com.