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TX divorce lawyerDuring Texas divorces, a couple’s marital property is subject to division. In most cases, this means that divorcing spouses must grapple with who will retain a variety of assets ranging from houses and vehicles to financial assets, such as bank accounts and pensions. Of these types of assets, financial property is often the most difficult to divide. This is especially true for pensions, the status of which depends on when the pension was acquired and whether a pre-existing agreement is in place. For help determining whether your own pension qualifies as marital property and whether you can expect a portion of those payments upon divorce, please contact a member of our high asset divorce legal team today.

Community Property States

Texas is one of only nine community property jurisdictions, which means that almost all assets acquired by a couple during their marriage are considered to belong equally to both parties if they later decide to divorce. The assumption in most cases is that these assets will be divided 50/50 between the parties. This rule applies to physical property, such as real estate and personal possessions, as well as financial assets like retirement accounts and pensions.

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b2ap3_thumbnail_QDRO.jpgMany high asset divorces require the division of substantial retirement funds, which in Texas, usually involves the issuance of a Qualified Domestic Relations Order (QDRO). These orders, which are issued by a judge, essentially separate and transfer retirement plans between two parties. In fact, the issuance of a QDRO is often necessary before an employer’s pension plan administrator will even agree to divide a retirement account. QDROs contain valuable information, including how the account will be utilized going forward and how its contents will be divided. If you have retirement benefits that were at least partially accumulated during your marriage, you may need to divide those funds with your ex-spouse upon divorce. To learn more about this process, please contact an experienced high asset divorce attorney who can address your questions and concerns.

Dividing Retirement Funds

A party’s retirement funds are not always divisible upon divorce, as courts will usually only order equitable division if funds were accumulated during the marriage itself. Although it depends on the type of account, this means that the retirement funds will either pay out on a regular basis in the future or will be available for withdrawal at the parties’ discretion. It’s also important to note that the only funds that will be subject to division are those that accumulated during the marriage. Funds that accrued prior to the marriage will remain the sole property of the named participant.

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Texas family lawyerCouples who are going through a high asset divorce often experience certain difficulties that are not faced by other couples. For instance, because the parties in these situations have a wide range of assets to divide, the dissolution process can become much more difficult, especially if the couple disagrees about who should retain what property. Dividing retirement funds can be particularly complicated, so if you and your spouse are going through a divorce and you have questions or concerns about dividing the contents of a retirement fund or pension, it is critical to speak with an experienced high asset divorce attorney who can ensure that you receive an equitable portion of your family’s assets.

The Importance of Accurate Record-Keeping

Unlike other types of accounts, retirement funds are not always checked on a regular basis. For this reason, many people forget how much has been contributed to their account at any given time. While this may not cause any serious difficulties in a person’s day to day life, it can become a problem during a divorce when having accurate and extensive records of account contributions can be instrumental in determining who will receive what portion of an account’s funds. This is because how a court divides a couple’s property depends on when the assets were accumulated. For instance, property owned prior to marriage will remain in the sole possession of the party who purchased or received it. Assets accumulated during the marriage, including the contents of a retirement account, on the other hand, will be divided equitably between the couple.

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Texas high asset divorce, Texas complex litigation attorney, Williamson County high asset divorce lawyer, A prominent financial advisor suggests that spouses who receive the marital residence following a high-asset divorce sell it, downsize, and use the extra cash to make catch-up contributions to their retirement accounts.

Such action is particularly appropriate if the divorcee is over 50, because persons of this age have less time to make up lost wealth. If a person saves $500 per month in housing costs, invests it, and realizes a 5 percent return, that extra cash will be $77,000 in ten years. Professionals suggest that the funds go into a 401(k) or other employer-sponsored retirement account; in most cases, account holders can put up to $24,000 a year into their 401(k)s.

After divorce, household income drops by an average of 23 percent for men and over 40 percent for women.

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Texas complex litigation lawyer, Texas high asset attorney, Texas complex divorce attorney, In many high net worth divorces, assets have an emotional value that is equal to, or even greater than, the monetary value. For example, a house is not just a residence; it is the place where the children grew up. The same principle applies to many personal property items, like grandfather clocks and sets of dishes.

Retirement accounts often fall into this category as well. In addition to their significant dollar value (a 410k, IRA, or other long-term savings account is often the largest asset in a divorce), the account represents years or even decades of financial sacrifice and the promise of long-term security. So, it is little wonder that there are many issues stemming from retirement accounts in a high-asset divorce.

Pre-Division

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The Law Offices of William D. Powers

8911 N. Capital of Texas Highway, Building 2, Suite 2105, Austin, TX 78759