The division of property is a large part of the divorce process. Depending upon the state that couples live in, the division of assets during divorce can take different forms.
It is important that parties understand the different aspects of this process. In regard to pensions in Texas, there are certain elements that contribute to their division.
In general, there are several factors that the courts consider when determining the proper way to split assets. Pensions are no different. Some of the main factors that the courts look at include:
- Length of marriage
- Separate property value
- Education level and earning capacity
- Child custody
- Contribution to dissolution of the marriage
These and other factors may have a strong impact on the division decision. However, the final determination depends upon what the courts deem as a fair distribution.
Since pension falls under property, the community property rules govern its distribution. Therefore, pension earnings that accumulate during the divorce are subject to division, while those that a party earns before the marriage remain separate property. However, the payment for pension earned during the marriage includes any interest payments.
Once the courts determine the pension split, the details are provided in a Qualified Domestic Relations Order. The order explicitly states the percentage of the pension that each party receives, as well as a schedule for distribution. The pension plan administrator must utilize this document to distribute the funds properly, and may do so in monthly installments or with one lump sum payment. In cases where the party earning the pension is still working, the other party may have to wait until the ex-spouse’s retirement to receive payment.
This is a brief overview of the pension division process in Texas. Couples who are considering divorce or going through the process may find it helpful to review the law and consult with an attorney so that they may decide their best course of action.