FAQ regarding Divorce # 17: How do we divide any retirement accounts?

Retirement accounts, not unlike mutual funds and some stock accounts, are assets acquired over the course of many years. In dividing these assets during a Divorce, you must first determine the character of the retirement account – in other words, whether it is Community Property or Separate Property (or, perhaps, both – as explained below).

First, purchases or contributions that occurred prior to the marriage would be Separate Property. Next, purchases or contributions that occurred after marriage would be considered Community Property. (Actually, it is a little more complicated than this, when you add in the earnings, losses, dividends and stock splits that occur in most retirement accounts, but the essential point is that such assets have a dual character.) Often, lawyers will hire financial experts to provide an opinion as to how much is owned by one spouse as separate property versus how much is jointly owned as community property, and therefore subject to division with the other spouse.

Also, retirement accounts (like 401k’s) are not usually divided under the Divorce Decree like other assets. This is true because there is often an administrator that is responsible for managing the retirement account. Under federal law, which Texas judges must follow, the Court will not be able to simply order the administrator to liquidate the account and pay it in cash to the respective spouses. Instead, federal law allows the state Court to issue a Qualified Domestic Relations Order (also simply known as a “QDRO” – pronounced for short “Quad Row”). The QDRO will set out how the account is to be divided. Ordinarily, the retirement account administrator will create another account in the amount (usually designated in either a total dollar amount or a percentage of the account as of a date certain) to be paid to the other spouse as specified in the QDRO. When the QDRO divides the account into two accounts, both spouses will be subject to the rules governing the retirement account (sometimes called the retirement “Plan”). Depending upon the Plan, disbursements for particular reasons may be allowed or loans may be allowed. You will need to check with the retirement account administrator to find out the rules relating to the Plan.

FAQ regarding Divorce # 10: What exactly is a Divorce Decree?

We usually ask you to consider the Divorce Decree in terms of being a “Rule Book” for all of the various things that could or might happen after the Divorce is granted. The actual granting of the Divorce is nothing more than the Judge declaring that the marriage is dissolved for either “grounds” or on the “no fault” ground of insupportablility. Insupportability just means that there are so-called “irreconcilable differences” -- referred to in Texas as a “discord or conflict of personalities that destroys the legitimate ends of the marriage relationship,” provided further that “there is no reasonable expectation of reconciliation.”

The rest of the Decree (as well as other pleadings referred to as Temporary Orders or Final Orders) provides guidelines and rules for dealing with any children (such as custody or “conservatorship,” the powers of conservatorship, visitation, child support, medical support, and health insurance coverage), property (such as assets and debts), and various other issues such as any change of name, taxes, and similar matters.

FAQ regarding Divorce # 9: When does my Divorce become final?

Although this might seem like a simple question, the answer is more complex. Ordinarily, the Divorce case becomes final when the “plenary power” of the Texas court has expired. This ordinarily occurs thirty days from the date that the Divorce Decree (sometimes called the “Judgment”) is signed by the Judge. If, however, some type of Motion is filed after the Decree is signed, such as a Motion for New Trial or similar pleading, then the time periods are extended to allow for the possibility of an appeal from the Decree.

Although there are other situations where the Decree can be changed, clarified, or appealed, these situations are not normal and can be very difficult to bring about a substantive (or meaningful) change in the Decree. Also, when a “material and substantial” change in circumstances occurs, a party may ask that the Court modify the Divorce Decree or a prior order in the case.

FAQ regarding Divorce # 8: How does the Texas waiting period work?

The Court does not have the power to grant a Divorce for at least sixty days after the Divorce petition has been filed. The Texas Legislature’s reason for requiring this waiting period is to ensure that something as serious as a Divorce is not rushed into without a period of reflection and thought. This waiting period cannot be waived by agreement or shortened by the Court.