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Specialty tag(s): Prenuptial and Postnuptial Agreements

What Happens to Retirement in Divorce?

Hayley Collins Blair | July 8, 2022

What happens to retirement in divorce?

The first thing to address is whether there is a premarital agreement or post-marital agreement that expressly addresses retirement assets. If such an agreement exists, then that agreement will control the retirement assets and how they’re divided in the divorce.

Assuming no post-marital or premarital agreement exists, then the retirement asset most likely will be considered community property as Texas is a community property state. Community property with retirement is most common because a spouse earns income during the marriage and then will contribute their income to retirement during the marriage. Upon divorce, all community property assets need to be divided and adjusted right manner.

Will marital or community property be divided equally between the spouses?

There’s a misconception sometimes in divorce that marital property or community property will be divided equally or 50/50 between the spouses, or that all assets need to be divided exactly in half. However, with retirement, that’s not always the case.

Sometimes with retirement, the spouse that contributed to the retirement will receive all of their retirement as part of a just and right division of community property assets. How does that happen? An example would be if a wife has a retirement account with $500,000 in it and the other spouse has a retirement of equal value or similar value or other assets existing of the marriage of equal or similar value. In this situation, the wife can be awarded all of her retirement because the other spouse can receive other assets of a similar value.

There is a situation, however, where a party may not be keeping their entire retirement account. That’s most common when the retirement accounts or accounts are the only asset of significant value in the divorce. In this situation where the wife has that $500,000 retirement account, but there are no other assets of significance, it’s most likely that the other spouse will receive a portion of their retirement.

Which situation applies to me?

To more fully understand your rights with regard to your retirement in the context of your divorce, it’s important that you meet with an experienced divorce attorney so that you can make sure to properly identify and characterize your assets. Contact Hayley Collins Blair at (214) 473-9696 to develop options to meet your financial goals.