A Texas divorce can involve a number of important financial decisions, including those related to retirement accounts. The property division phase can be significant and complex, and without good guidance, an individual could give up an interest in an important asset without realizing the long-term ramifications. Because there are so many types of retirement accounts, good counsel is important.
The tax consequences of a given retirement account could affect the value to the party who is awarded a share of a pension, 401(k) or IRA. Additionally, the timing of the valuation and the actual division of assets could be important as market changes can increase or decrease value over time. A spouse's income does not necessarily reflect the value of retirement assets. In some cases, a person might earn a modest living but have a generous retirement plan. In other cases, retirement assets could be far less than expected for an individual who earns a sizable salary.
In some cases, retirement accounts could be cashed out after being awarded in a divorce. However, the tax consequences could wipe out a significant amount of value. It may be important to discuss the values of such assets in light of their tax liabilities to ensure that the result is a truly fair division of resources. Without sound advice, an improper move regarding retirement plans could lead to long-term challenges.
During a divorce, there can be various points of contention related to these types of issues. It can thus be helpful to carefully review the situation with a family law attorney prior to filing or before entering into settlement negotiations.