Texas employees who have worked hard for a pension know that it’s a very valuable asset to have. When undergoing a divorce, it’s likely that you’re worried about what will happen to your pension in the divorce proceedings. By understanding what can happen, you can better protect yourself from losing it.
Start by learning the laws in your state
Property division laws are different in each state. It’s highly advisable to talk to a lawyer about what laws govern the divorce process in your state. In most cases, your estranged spouse will have to file a formal document in order to receive any of your pension. This document is called a Qualified Domestics Relations Order or QDRO. This process is not done automatically.
Be mindful of what was earned during your marriage
As a general rule, any pension contributions made during the marriage are considered marital property. However, any pension contributions prior to the marriage can be considered separate property. When a piece of property is considered separate, your former spouse is not entitled to it.
You can always consider an alternative
Just because your former spouse is entitled to half of your pension doesn’t mean that they have to take it. In many cases, it’s simpler to offer your former spouse one of the assets that you were awarded from the divorce of equal value. For example, if you were awarded half the value of your home and that is equal to half of your pension, you may offer your spouse full ownership of the house in exchange for giving you full ownership of your pension.
Your pension is a big part of your financial future. While you’re undergoing a divorce, your pension is likely going to be one of the assets that has to be divided up. But understanding how it can be divided and what alternatives you have, you can set yourself up for the best chance of financial success.