If you’ve spent your years accumulating a large amount of wealth, you may be super worried about undergoing a divorce. In high-asset divorce cases in Texas, pensions tend to be a hot topic. Understanding what happens to your pension during a divorce can help you to better prepare for the proceedings.
A pension is considered a marital asset
In a high-asset divorce, a pension plan is typically considered a marital asset. Throughout the divorce process, all assets are to be divided between the two parties according to the standards set forth by the state that the divorce proceedings are taking place in. Since a pension may have been contributed to in the years before you were married, you can deduct the amount that was earned prior to your marriage from the total amount. Only the pension contributions during the period of your marriage are able to be split equally between you and your former spouse.
Taking a closer look at your pension plan
Pension plans have two key areas that you’ll need to concern yourself with. First, you need to know how payments are to be distributed. Second, you’ll need to know whether or not your individual plan offers survivor benefits.
Most pension plans give the option of providing a lump-sum payment or a monthly annuity. You’ll need to negotiate with your former spouse to determine if you’ll consider dividing the lump-sum payout or the monthly payment. In the event that your plan has survivor benefits, your former spouse will continue to receive monthly benefits if they live past your death.
Undergoing a divorce can bring to light many different questions. One important one is how your pension account will be handled. As you’ve discovered, by understanding the specific options of your pension plan and knowing the laws that govern your state, you can better prepare yourself for how your pension will be affected by your divorce.