Texas workers who hold a pension plan are likely worried about what’s going to happen to it when they go through the divorce process. The reality is that your former spouse will most likely be entitled to half of your pension plan contributions during the marriage. Understanding how to split a pension plan and various alternatives that you can use to avoid having to give up any of your pension plan can help you to better plan for your divorce.
Pre-marital vs. post-marital contributions
In most states, your former spouse will be entitled to half of your pension contributions while you were married. It’s important to realize that you still can maintain sole ownership of any contributions you made prior to the marriage. You want to speak with your lawyer about determining which contributions were made pre-marriage and which contributions were made post-marriage. Property division should only be happening to your post-marriage contributions.
Proposing an alternative
Just because your former spouse is legally entitled to half of your post-marital contribution pension funds, it doesn’t mean that they have to take them. In many cases, you may be able to keep your entire pension intact if you propose an alternative asset for your spouse. Once you determine what the amount of post-marital contributions are and divide that by two, you’ll know what the value of the pension is.
Once you know what your spouse will be getting from the pension, you can offer them your stake in another marital asset to help offset the amount they will receive from the pension. For example, let’s say that you’re being awarded one of your marital vehicles worth $20,000. If your former spouse’s half of your pension is equal to $20,000, you may simply offer to give them ownership of the car instead of taking the money from your pension plan.
One of the biggest topics of discussion when it comes to the idea of divorce is how retirement plans are divvied up. While most states require that pension plans be split down the middle, you do have alternatives that you can take advantage of. It’s advisable to speak to an attorney about potential alternatives in your individual scenario.