Going through the divorce process can be strenuous and confusing. One of the most stressful aspects can be asset division.
If you or your ex-spouse has a pension plan in place, it is important to understand how the court views it in the divorce process. Here are a few key facts you should know.
The property classification plays a major part in determining its division. Texas is a community property state; therefore, property that parties acquire during the marriage is deemed as community property. This applies to pensions, in that any pension or interest payments a party receives during the marriage or during the divorce process counts as community property. However, any pension earned before the marriage is the sole property of the recipient.
Once the court determines the amount of pension to split between the parties, along with other assets, it must determine the actual division of assets. The court considers a few key factors in this decision, such as:
- Property value
- Length of marriage
- Child custody (if applicable)
- Contribution of marriage dissolution
These and other factors contribute to the decision. However, judgments are not all the same; the judge can make adjustments when necessary to reach a fair judgment for both parties involved.
For the pension distribution to begin, the court creates a Qualified Domestic Relations Order. The pension plan administrator must make the distribution in the amounts and timeframe as denoted in the order. Depending on the status of the pension plan on the divorce, the distribution may be in installments, a lump sum or deferred until a later date.
Taking the time to understand the division of pension during your divorce helps you to properly prepare for life after divorce. It will definitely be beneficial to put a new budget in place for your adjusted income.