• 22
  • March
    2011

Pensions are company sponsored funds intended to pay the company's employees livable incomes during their retirement. When dividing assets in a divorce settlement, pensions or other retirement accounts are considered marital community property - at least in part - and are subject to valuation and equal distribution.

Retirement accounts and pensions are important, especially when the fund has a high lump sum value, which is the accumulated amount that the fund is worth and will pay out. Pensions can easily go unnoticed in divorce proceedings, as the only notifications the participant receives is a periodical statement of the financial condition of the pension. If pension and retirement-account participants want to know what their future monthly pay-out looks like, they must contact the company personally.

In Texas, the laws require that all funds accumulated in a pension (or 401K or other retirement account) during the marriage to be considered marital community property. The future earnings of the accumulated assets are also factored in to the valuation process.

In a defined benefit pension plan, the amount of the future monthly pay-outs depends on the pension holder's length of service or salary. A divorce attorney would work with a financial specialist to calculate the lump sum value of the pension, taking into consideration the change in value at the time of the pay-out.

The pension can be divided by splitting the actual monthly pay-outs at the time of retirement or by compensating the non-working spouse with other assets worth their share of the pension's lump sum value.

Generally, if you are facing divorce proceedings and are concerned about the division of your financial assets or retirement fund, contact an experienced divorce attorney. You need an attorney familiar with the division of pensions and the laws regarding a qualified domestic relations order, or QDRO.