Steering You Toward Your Best Options

3 FAQs about retirement and employee benefits after a divorce

On Behalf of | Jun 29, 2023 | Divorce

Any divorce comes with nuances. That only gets more complex for a longtime couple with assets, employee benefits and retirement funds.

Although Texas continues to have one of the lowest divorce rates, people change and grow apart. While the home often garners the most attention, the next biggest asset that comes under scrutiny remains retirement accounts.

What retirement accounts may get split?

During a divorce, the Texas courts focus on the rights of each spouse when it comes to retirement accounts. While the length of a marriage may play into the division of some accounts, the courts may split the accounts. The types of accounts that the courts may consider community property include 401(k)s, IRAs, pensions and deferred compensation accounts.

Do the courts consider retirement accounts community property?

With more people having 401(k)s, one may wonder if the courts will consider it community property. In general, it comes down to when contributions started. If a person had an established retirement fund prior to the marriage, the courts may see those as personal property. Any contributions made during a marriage will likely fall into the community property category. Once a person files for divorce, Texas law prohibits either partner from closing any retirement funds.

Will a spouse have to continue paying health insurance?

When it comes to benefits, health insurance ranks high. In many cases, one spouse carries coverage for the family. After filing for divorce, a judge will likely issue an order that ensures no health care changes get made during the proceedings. Unless a person includes continued coverage in the divorce agreement, the spouse without coverage may obtain COBRA coverage for three years.

Depending on the circumstances, working with a future ex to hash out the division of property may result in a better outcome.