Don’t Let Divorce Derail Your Retirement
by Houston Divorce Attorney Sam M. “Trey” Yates, III
If you are considering or going through divorce, it is likely that divorce will impact your retirement. However, the more knowledgeable you are about yours and your spouse’s finances, including your retirement benefits, and divorce law in Texas, the better prepared you will be to make sure divorce doesn’t derail your retirement.
You and your spouse will begin the divorce process by gathering together all your financial documents. This will include statements for all your retirement accounts — Individual Retirement Accounts (IRAs), 401(k) and 403 (b) accounts, and profit-sharing plans, as well as Roth IRAS and other pension plans. Increasingly, the variety and complexity of these plans may require some expert consultation or valuation during the divorce process.
You and your spouse will also be required to provide documentation on any other marital assets purchased during the marriage such as real estate, cash, stocks and bonds, automobiles, trust interests, businesses, stock options, valuable collections and more.
Working with your legal team, marital assets will be designated as community property or separate property, according to Texas divorce law. If the property was acquired by yourself or your spouse before marriage, it will likely be considered separate property and not subject to division in a divorce. Be prepared to provide documentation as to its origin. However, if the separate property has increased in value, that increase may be considered marital or community property, and thus, subject to division. If during your marriage, property was acquired through a gift, bequest, inheritance, law suit, etc., the asset may be your separate property even though it was acquired during the marriage.
All marital assets designated as community property should be appraised or valued. This may require special expertise, for example, if a family business or unique executive benefit packages are involved. Be cautious when comparing the dollar value of marital assets. A $100,000 IRA is not equal to a home with $100,000 in equity. Homes typically require ongoing maintenance and unexpected repairs; real estate values can also fluctuate dramatically in market downturns and may incur capital gains taxes when they are sold.
As you become knowledgeable on the financial aspects of divorce as well as divorce law in Texas, you will be in a better position to know what assets you want to secure from the settlement. Discuss your post-divorce goals with your divorce attorney in Houston. Then, map out a strategy designed to help you achieve those goals, without derailing your retirement plans.
Sam M. “Trey” Yates, III is a Houston-based Board Certified Family Law Attorney and creator of The Guide to Good Divorce℠ seminars for women. If you have questions about your Texas divorce, please contact The Law Office of Sam M. “Trey” Yates, III, P.C. for a consultation. If you’d like more information about Trey Yates’ 2016 Guide to Good Divorce seminars, please visit www.GuideToGoodDivorce.com or call 713.742.6606.