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Divorce and Your Retirement Assets

What will happen to my retirement accounts in a divorce?

Your retirement assets are an integral part of your future. You have likely worked for years or even decades to save for retirement, and rightfully you may feel concerned about what might happen to your retirement accounts during a divorce. According to a study released by the Insured Retirement Institute, 24 percent of divorced individuals self-report that they are in a worse position in retirement due to their divorce and they will need to work longer as a result of the divorce. Our Austin, Texas divorce lawyers at Stinson Moyle, PLLC, discuss the impact divorce could have on your retirement and how you can help to protect your retirement assets.

Division of Retirement Assets During Divorce

Texas is a community property state, which means that all property acquired during the divorce will be presumed to belong to both spouses, and thus be subject to division upon divorce. Marital property could include homes, vehicles, furniture, and retirement funds earned during the marriage. Separate property includes property inherited before the marriage or property received by one spouse alone during the marriage. Separate property, which could include retirement assets earned before marriage, will remain the property of its owner.

In Texas, your retirement accounts will likely be divided between you and your soon to be ex-spouse during the divorce. Texas law specifically calls for the “just and right” division of assets. While often retirement funds will be divided evenly, the court could elect to distribute the retirement funds unevenly if certain factors exist, such as fault in the marriage, domestic violence, gross disparity between the party’s earnings, and the like.

Protecting Your Retirement Assets

The best way you can protect your retirement assets is through advance planning before you even walk down the aisle. With a prenuptial agreement, you can specify who will receive what percentage of monies in your retirement accounts if the marriage ends. A prenup will trump community property laws and completely protect your assets, so long as it is upheld.

If you do not already have a prenup and are headed for divorce, you may wish to consider negotiating with your spouse so that you can keep your retirement funds. Your attorney will help you to develop the best strategy for keeping the greatest share possible of your retirement funds during your Texas divorce.