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Retirement account often overlooked among divorce issues

Sunday, June 24, 2018

There are a number of different challenges that both spouses will face in a divorce situation.  Texas residents are well aware of the depth and breadth of divorce issues ranging from child custody to asset division. However, in the case of dividing property and assets, one particular asset is often overlooked entirely -- the retirement plan.

Modern media would suggest that fewer and fewer people are in a position to save for their retirement, but the reality is retirement funds are still taken seriously by the majority of Americans.  Many people have managed to pull together "nest egg" funds for the end of their working career, sometimes to the tune of hundreds of thousands of dollars.  Even if the number is considerably lower, however, a retirement fund is still considered a marital asset and is subject to division dependent upon the laws of the couple's home state. 

The division also depends on the type of account being discussed.  IRAs, for example, are regulated on the state level, while 401k accounts are handled federally. Here in Texas, retirement funds accrued during the marriage would be considered community property, and therefore, potentially subject to an equal split between the two spouses.  However, support from a professional in negotiating that split can often be helpful. 

Divorce issues can take many forms, but Texas residents know asset division is often the most contentious after child custody.  Understanding how assets are split in one's home state and knowing ahead of time what assets are on the table can be helpful in facilitating a faster and more equitable solution.  This can put both parties on the road to a more fulfilling life as individuals.  

Source: The Huffington Post, "The #1 Most Overlooked Divorce Asset", Daniel Sentell, Oct. 2, 2014

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