What happens when the divorce decree doesn’t include the 401k and other retirement assets?

I receive this common question from people in the midst of a divorce, particularly those attempting a pro se divorce. (Divorce without the help of an attorney.) The story is sometimes different but the question is always the same. Sometimes the spouses agree not to mess with dividing retirement accounts in the divorce to keep things easy; but then one of the parties has a change of heart down the road. If you have a QDRO issue in a divorce then you should contact Fort Worth divorce lawyer Adam Kielich.

Sometimes spouses fails to realize the value or how much retirement assets could be divided in a Texas divorce. Perhaps each spouse fails to obtain enough information to make an informed decision.Whatever the reason, many people come back around and decide they want to see what options are available to divide the retirement assets after the divorce. Here is the general rule:

Once the Texas divorce is complete, there are few opportunities to add a division of retirement assets to the divorce.

The Texas Family Code provides limited ability to amend or modify a divorce. When it comes to property division and divorce, generally there are only three ways you can obtain division of the retirement assets through a court of law.

1. The Texas divorce decree is silent on the retirement assets

The Texas Family Code permits a second lawsuit to divide property undivided by the divorce decree. It is important to note that the second lawsuit cannot change the division that already exists in the decree (with one exception explained below). It can only divide assets not addressed in the decree.

If your decree already states that the retirement accounts are awarded as the separate property of the owners of the account then you are out of luck on this option.

If your decree does not specifically address the retirement accounts but contains general language that states any property not specifically addressed by the decree is the property of the spouse who possesses it at the time of the decree then you are probably out of luck but that language may not apply to financial assets or real property.

This suit must be brought within two years of the date your ex-spouse communicates to you a lack of ownership interest in whatever retirement assets he or she possesses. This can be a somewhat technical timeline. The easiest way to think about it is that once you make a request to your spouse for division of the retirement account, that will start the two year clock.

2. Fraud by one or both spouses prevented fair division of property by the Texas family law judge

Sometimes in a divorce one or both spouses will try to hide assets from the other spouse. That can be true regardless of whether one, both, or neither spouses have hired a divorce lawyer.

If assets were hidden or intentionally misrepresented then that can lead to a second lawsuit on the divorce to adjust the division of property to make the division “just and right” based on the assets as they actually existed at the time of the divorce. Unlike the above situation, the two year statute of limitations does not apply to fraud in the division.

It is important to understand that fraud means an intentional concealment of the existence or true value of property. That means, to explain it simply, the other spouse: (1) either lied about the existence of the retirement accounts or knowingly insisted to you that the account was worth a lot less than he or she knew it really was; (2) knew those statements would relied on as an understanding of the marital property; and (3) that the party relied on those statements. Fraud could either occur in obtaining a settlement or in a trial that decided the division of property.

It is not fraud if your ex-spouse innocently forgot accounts existed or misunderstood the value of the accounts. It is also not fraud just because you failed to ask about the existence of retirement accounts.

In a Texas divorce you have the opportunity to conduct discovery. You can ask for information about property and the other party has an obligation to produce the requested information. If you failed to conduct discovery then it is more difficult to prove concealment or misstatement of value was intentional.

3. The divorce court ordering your divorce lacked jurisdiction over the retirement accounts

In this extremely rare situation where the family court that issued your divorce decree lacks jurisdiction over retirement assets, you can file a second lawsuit to divide the retirement assets in a court that will have jurisdiction. Often this situation applies to real property; but it is possible that it could apply to retirement accounts and other financial assets. You may need to file that second suit in the state where the retirement assets exist. Like the first option, a technical statute of limitation applies.

dividing investments in a Texas divorce

Contact a Texas divorce attorney

If your divorce is over and you need to divide retirement assets afterwards then speak with a divorce attorney in Texas about options. You may not have any options available; but because these situations can be legally technical issues you should consult with counsel.

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