If you did not enter into a premarital agreement (Tex. Fam. Code § 4.001(1)) with your spouse concerning your retirement accounts, it is likely that at least a portion of those retirement accounts would be classified as community property — and thus subject to division — in the event of a divorce. Under Chapter 3 of the Texas Family Code, any property that is possessed by either spouse at the time of divorce is presumed to be community property. Community property, or property of the marriage, will be distributed in a divorce. The only property not subject to division is separate property, which typically only includes property owned by one of the spouses prior to the marriage, property acquired by one of the spouses through a separate gift or inheritance during the marriage, or property acquired by one of the spouses through a personal injury settlement or verdict during the marriage.
While you may have begun contributing to your retirement accounts prior to the marriage, any contributions made after the date of marriage are likely to be classified as community property – unless you have a premarital agreement in place, which specifically defines your retirement accounts as separate property. However, even if you do not have a premarital or prenuptial agreement, you may still be able to protect your retirement accounts with a postnuptial agreement. Let us tell you more.
Creating a Marital Property Agreement in Texas for Your Retirement Accounts
Section 4.102 of the Texas Family Code allows two parties who are married to enter into a marital property agreement. More specifically, the statute allows the parties to agree to a partition or exchange of community property. The law says spouses may partition their community property as they wish. Property partitioned to a spouse by agreement becomes that spouse’s separate property and is not divisible by a court.
In other words, a married couple can enter a contract that looks a lot like a premarital agreement but takes place after the date of marriage. In this contract, the parties can reach an agreement for certain community property (such as retirement accounts) to become separate property of just one of the spouses. Since the statute also allows the parties to reach an agreement about currently existing and future property, the spouses can agree all existing retirement accounts, as well as future contributions, will be the separate property of the spouse who is making the contributions to those accounts. By agreeing the retirement accounts will be separate property, this marital property agreement — or postnuptial or postnup agreement — will result in that specific property not being divided or distributed by the court in the event of divorce.
Make Sure the Postnuptial Agreement is Enforceable
To protect your retirement accounts and ensure the terms of your postnup will be enforced, it is essential to understand when a court may not enforce a partition or exchange agreement. The following are reasons the court may not enforce a postnup in Texas:
- Party did not sign the partition or exchange agreement voluntarily; or
- Agreement was unconscionable when it was made.
A Texas divorce lawyer can help to ensure your postnup is enforceable.
Contact a Texas Postnuptial Agreement Lawyer
If you want to protect your retirement accounts with a marital property agreement, an experienced Texas postnuptial agreement attorney at our firm can help. Contact Orsinger, Nelson, Downing and Anderson, LLP to learn more about the services we provide to clients in Dallas, Fort Worth, Fisco, and San Antonio.