Texas Pre-Tax-Exempt Plan Division Lawyers
No matter what the circumstances, a divorce is a difficult and challenging time in life. You may experience emotional pain, lost friendships, and financial uncertainty.
During a divorce, the equitable division of assets is crucial to safeguard your family’s financial future. In Texas, any assets acquired during a marriage are considered “community property” and are subject to division by the state courts.
The San Antonio retirement account division attorneys of Higdon, Hardy & Zuflacht, L.L.P. understand the hardship that comes with the breakup of a committed relationship. We also know that every situation is unique. Our attorneys are ready to listen to your story and use that information to develop a customized strategy to protect your financial interests.
If you have concerns about the division of assets during your divorce, contact Higdon, Hardy & Zuflacht, L.L.P. and let us put our knowledge and experience to work for you. Each of our partners is board certified in family law. This is a distinction held by less than one percent of Texas lawyers.
Call our office today at (210) 349-9933 or contact us online to start your initial, confidential consultation.
Plans That Benefit from Pre-Tax Exemption
According to U.S. tax law, a tax deduction is an amount of money that’s included in your income and then deducted from your taxes. What you can deduct and how it is deducted depends on the tax rules. Your accountant or tax attorney can help you with those questions.
Money that is tax exempt is income that is not taxed before you use it. Pre-tax exemptions are also called pre-tax deductions and are money taken out of an employee’s gross pay before taxes. The pre-tax deductions reduce taxable income, which means the employee owes less income tax. The pre-tax deduction may also impact Social Security, Medicare, and FICA tax.
The list of pre-tax exemption plans can change when the tax law changes. Pre-tax exemptions can be used to fund retirement accounts, health savings accounts, and flexible spending accounts, and pay for short-term and long-term disability insurance premiums, childcare expenses, and commuter benefits, to name a few.
One of the most popular pre-tax exemption plans are healthcare accounts that can include a flexible health savings account, health savings account, or health reimbursement account. To qualify for tax-exempt status, they must have proper documentation in place.
How Are Tax-Exempt Plans Divided in a Divorce?
Divorce is a qualifying life event (QLE), which impacts what you can and cannot do with your employee benefits. For example, your spouse is no longer eligible for benefits effective from the date of the divorce through the end of the pay period in which the divorce was finalized.
During a divorce in Texas, tax-exempt plans are eligible for equitable division of the assets, not necessarily a 50/50 split. For example, health savings accounts are treated like retirement accounts during a divorce. Any contributions that were made by either partner into an HSA is considered marital property.
When the assets are divided, marital property is grouped together and then divided by the court. This means that if both spouses have an HSA account, logistically, each HSA account will be split in half and given to each partner.
However, what is split is the value and not the literal dollars. Depending on the assets, it’s possible that the HSA accounts will not need to be divided. For example, if both partners have an HSA account and the value of one account is $10,000 and the value of the other account is $7,000, the $3,000 difference can be taken from other marital assets.
It is important that you review your beneficiary designation for all tax-exempt plans during a divorce. The beneficiary is the person who will receive the account in the event of your death. In most cases, your soon-to-be-ex-spouse was probably the beneficiary. Tax-exempt plans such as an HSA account do not pass through the will, so the beneficiary designation is how the account will be dispersed.
Our San Antonio Attorneys Can Help
During a divorce, it is vital that you keep an eye on the equitable division of assets to safeguard your financial future. When this is not handled properly, it can place your future at risk. A divorce is a life-changing event. You need an attorney who has experience handling your situation with care and compassion.
Our attorneys have many years of experience dividing retirement assets, including tax-exempt plans. Once the division of assets has been approved by the court, our team knows the legal process needed to move the funds.
Divorce law varies from state to state. You want an attorney who has a successful track record in Texas. Even if your divorce is amicable, dividing assets can be complicated. An experienced divorce attorney can help steer you through the division of retirement assets.
When you choose Higdon, Hardy & Zuflacht, L.L.P. to represent you, you can trust that we will aggressively negotiate to protect your financial interests and will keep your best interests in mind. Our attorneys will also keep you informed through the process so there are no surprises.
Contact Our Tax-Exempt Plan Division Lawyers Today
Divorces have lifelong consequences. The process is often emotional and tumultuous. The decisions you make during your divorce can have a significant impact on your future. While this is a difficult and painful time, Higdon, Hardy & Zuflacht, L.L.P. is here to answer your questions and provide you with outstanding client service to reduce your stress.
It can be difficult to make decisions during a divorce. The legal team at Higdon, Hardy & Zuflacht, L.L.P. will help you understand your options and make informed decisions. We are proud to share our client testimonials because our reputation is built on a history of strong client service.
Whether your divorce is simple and amicable, or complex and contested, our attorneys have the experience and skill you need. Dividing retirement assets and tax-exempt plans can be worrisome. Our legal team fights hard to protect the financial assets you deserve.
Call our office today at (210) 349-9933 or contact us online to schedule your initial confidential consultation. You are not in this alone.