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2 ways to address pension benefits in a Texas divorce

On Behalf of | Aug 17, 2022 | Divorce

Pension benefits can help provide you with stability for the rest of your life after your retirement. However, they may not go as far as you would like them to if you have to divide them in your upcoming divorce.

Some people can keep their retirement savings out of their court proceedings because they signed a marital agreement with their spouse that made their retirement account separate property in the event of a divorce. Those who do not already have an agreement with their spouse regarding the division of retirement savings or pensions will have to negotiate the matter directly with their spouse or present the issue to the courts in litigated property division proceedings.

If the courts must divide some of your pension because it is part of your marital estate and subject to community property rules, what are two of the ways that they could split the pension benefits?

They can order the division of the account

When your pension involves an account with a specific balance, possibly a combination of contributions you and your employer have made over the years, the courts can order the division of the actual account.

The process will involve specialized documents, but if you and your attorney follow the right procedures, there won’t be any penalties other than the reduction in the account’s overall balance because you must split the account.

They can order alimony payments

Some pension benefits involve a system of payments rather than an account with a balance. If you do not have an account in your name to split but will instead receive payments in the future for a fixed amount of time, the courts could order alimony payments during those pension years as a way to split the pension between spouses.

However, pensions can be difficult to directly divide, and a long delay between a divorce decree and a pension payout could lead to dissipation and other issues. The courts may be more likely to consider the value of the pension and then use that amount to inform other important property division determinations.

Although Texas does have community property rules, a judge doesn’t have to split your property 50/50. They can deviate from that standard if they believe it would be fair given your circumstances. Learning more about what will happen to your most valuable property, like pensions and retirement accounts, in your Texas divorce can help you develop a better strategy for family court.