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3 ways to protect your retirement savings in a Texas divorce

On Behalf of | Mar 22, 2022 | Divorce

Divorce in Texas is often a painful process. Not only do you have to cope with some difficult, negative emotions, but you also have to completely separate your life from your spouse. This process takes months and often leads to intense disputes between former spouses.

Sometimes, divorcing couples make the experience harder on themselves by trying to hurt or punish each other. Keeping your focus on the big picture and your future happiness will help. Everyone thinking about filing has their own priorities. Some people very much want to keep their marital home.

For you, the biggest priority is currently your retirement account. You want to protect it when you divorce. Under Texas community property laws, what you added to that account during the marriage is likely subject to division, even if your spouse never contributed to the account themselves. How can you protect the savings you have accumulated for your golden years?

If you divide the account, use a QDRO

If you have no choice but to divide the retirement account and give a portion of the balance to your spouse, a qualified domestic relations order (QDRO) is a necessary document. After approval by the courts, a QDRO allows you to divide an existing account without the penalties or taxes that typically come from an early withdrawal. 

Protect your retirement as your separate property

If you and your spouse executed a prenuptial agreement, you may have already agreed that the retirement account in your name is your separate property. All you have to do is enforce that agreement in court. You may be able to protect specific accounts or a portion of a long-term account as separate property based on your contributions prior to the marriage.

Negotiate your own property settlement

If the amount in your retirement account is marital property and you do not want to split the account, you can potentially negotiate with your spouse to protect the retirement account. Divorcing couples have the right to set their own terms for uncontested divorces. As long as your spouse agrees with your request, you can keep the entire retirement account for yourself as long as they receive something that they feel is of comparable value.

Focusing your efforts on your top priorities will help you achieve a better outcome in the property division process of your Texas divorce.