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Property Division in Divorce

What happens to your 401(k)?

The Texas Family Code has set out guidelines as to how assets should be valued and divided in a divorce. In the end, however, the only real requirement is that they be split in a “just and right” manner. What exactly does that mean? It may be easy to determine who gets the car, but something like a retirement plan can be much more complicated.

Let’s take a look at your 401(k). As with any assets, the court is going to try and determine whether it’s community property and belongs to both spouses, or separate property, and belongs to a single spouse. “That sounds simple enough,” says Brad LaMorgese, a partner at Orsinger, Nelson, Downing & Anderson. “But remember that a 401(k)’s value increases over time.” The employee spouse may have had the plan the day they got married, but it’s worth more today than it was then. In this example, the 401(k)’s original value, as well as the increase in market value is separate property. Contributions to the account made during the marriage are the community property of both spouses. Determining the value of each is simple subtraction.

Of course, it’s possible this math will prove unnecessary should both spouses decide to split the value of the 401(k) between them. This sort of arrangement isn’t required, but it can be done. Another possibility is that, regardless of its value, the court will simply give the plan to the employee spouse and find another way to compensate the other spouse. LaMorgese says, “It’s at times like these we’re reminded that ‘just and right’ doesn’t necessarily mean ‘fair.’”




Unwinding a couple’s financial history is often complicated.
Brad M. LaMorgese has been doing it for years, and in the process helping to make some of the hardest times in his clients’ lives just a little bit easier. In areas such as divorce, where certain aspects of the law can be broadly defined, it’s essential to work with an attorney who not only has experience in family law, but has a long history in complex litigation. LaMorgese’s experience spans nearly 20 years. Board Certified in Family Law by the Texas Board of Legal Specialization, he’s handled cases involving business valuation issues, high-net-worth individuals, property division, interstate and international child custody disputes, and marital agreement litigation. In addition, he’s one of the few appellate family lawyers in Texas, and has seen success not only in Texas appeals courts, but the Texas Supreme Court, and the U.S. 5th Circuit Court of Appeals. LaMorgese understands the often difficult terrain his clients face, but also how to help them define their goals and achieve them.

 

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