Whether it is something you have owned for a long time or a short amount of time, the idea is that what is yours will remain yours. Unfortunately, when it comes to a divorce, some of this property will be deemed marital property. This means that any assets one obtains while married may be considered community property in the state of Texas. This means that upon divorce these marital assets will be divided evenly between the spouses. In some cases, a spouse’s retirement assets will be up for grabs, making it important to understand how best to protect this asset in the divorce process.
Whether you are decades away from retirement or a few weeks away, it is important to note that divorce will likely cause your retirement accounts to take a major hit. Dissolving a marriage often means that a retirement account, like other financial accounts, will have to be divided among you and your spouse. Essentially, this means that your retirement saving will shrink substantially.
Retirement accounts are impacted in other ways too. When a couple divorces, they go from a two-income family to a single-income family. This means that it is even harder to save, and at least for a while, it is possible that not much will be contributed to a retirement account moving forward. In community property states, like Texas, any assets acquired during a marriage are considered jointly owned. This is true regardless of who saved the money and what it was for. Thus, the best way to ensure this and other assets are protected is by including a premarital agreement. This can specify the percentage of a retirement account that will go to each spouse, should their marriage not last.
Whether you are worried about retirement accounts or any other asset, it is important to understand how assets will be treated and divided in the event of a divorce. If one is worried that an asset they want to remain separate will be treated as a marital asset, it is important to take steps like drafting a premarital or marital agreement. One should consider his or her rights prior to, during, and after marriage.