Is There An Absolute Rule That You Have to Divide all 401(k) Plans in ½ Or Can a Spouse Keep the Entire 401(k)?


The actual rule is that the court can divide your 401(k) plan pretty much how it deems fair.  Fair is not always 50/50.

Yet, it is most typical to see all retirement accounts divided in ½.

And, the actual rule for you and your spouse is if you AGREE to divide the 401(k) by letting one spouse keep the entire thing, the court will generally honor that.

Here is the formal law:

In exercising its discretion, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage. Tex. Fam. Code Ann. § 7.001.

*Note, how this law says nothing about dividing accounts in ½.*

A trial court has wide discretion in dividing the community estate. Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex.1998)Murff v. Murff, 615 S.W.2d 696, 698-99 (Tex.1981)Beard v. Beard, 49 S.W.3d 40, 66 (Tex.App.-Waco 2001, pet. ref’d.).

There are some legal reasons listed below that a judge can use to award a larger portion of the 401(k) than only ½.

Again, the court need not divide the community estate equally.  Smallwood v. Smallwood, 548 S.W.2d 796, 797 (Tex.Civ.App.-Waco 1977, no writ). Texas courts have considered the following factors when equitably dividing a community estate:

(1) fault in the breakup of the marriage;

(2) the benefits that the innocent spouse would have derived had the marriage continued;

(3) disparity in the spouses’ income or earning capacities;

(4) each spouse’s business opportunities;

(5) differences in the spouses’ education;

(6) physical health and need for future support;

(7) the relative ages of the parties;

(8) each spouse’s financial condition and obligations;

(9) the size of each spouse’s separate estate and any expected inheritance;

(10) the nature of the spouses’ property;

(11) the rights of the children of the marriage;

(12) waste of community assets or constructive fraud against the community;

(13) gifts by one spouse to the other; and

(14) tax liabilities.

Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex.1998).

If you are trying to win more of your 401(k) in the divorce, these above listed reasons are what your court hearings should center on.

That said, in truth, what we see in Texas Courts is that a “big win” is when a judge awards one spouse 60% of the marital estate, as opposed to 50%.

Hoping that your lawyer will win for you 100% of the estate’s value is a false hope.

That said, we asked:

Does your spouse want a part of your 401(k) in the divorce outcome?

This actually matters a lot, so if you do not know, you need to find out.  Some spouses in divorce, simply do not want to touch their ex-spouse’s retirement money.

Sometimes they feel, for personal reasons, that it is not proper to accept the money.

Sometimes people feel that they do not need the money. It is worth asking your spouse whether they require keeping a portion of your 401(k) plan.

If they do not want it, you have the ability to enter an agreement in your decree that they will not be awarded any of it.

If There is No Good Reason To Get the Judge To Award You 100% of Your 401(k), Then You Could Instead Try to Offer Something Of the Same Value


Is there any asset, account, property, or thing of value,  in your marriage that you would be willing to “give up” or give to your spouse in order to keep your 401(k) for yourself?

Even if you cannot win a large portion of your 401(k) due to fault of your spouse in this divorce, you can still win 100% of your 401(k), in some cases, by offering to give your spouse something else.

Now, in order to prevail on this approach, you need to be prepared with an appraisal, or some good faith showing, of the fact that what you are offering in exchange for keeping 100% of your 401(k) is comparable in value to what your spouse is giving up in his/her share of ½ of your 401(k).

The Losing Argument That People Love To Make In Court, Which Fails 100% Of The Time


Constantly, we see people try to persuade lawyers and judges that they should not have to give up their 401(k) because they earned it.

They were the one that went and worked, and sacrificed and saved.  Their spouse did not do those things.  Their spouse should not get the money.

This argument, while easy to understand, is like nails on a chalkboard to a judge.

Saying it in court will cause you to lose any ability to persuade the  judge to favor you in the division of your property.

How Does Removing 401(k) Money And Hiding It During a Divorce Work? (Hint: It does not work out well for the person that hides it)


If there is a 401(k) that is not in your control, do you think your spouse is willing to hide 401(k) money from you?

Here is a recent case that involved Brad hiding 401(k) money from his spouse.

After a decree of divorce ordered Brad to pay his wife part of his 401(k), he instead removed the 401(k) money and refused to pay her.

His wife’s lawyer brought him to court, and in front of the judge asked him the following questions below-

Yet, because taking money can be considered a crime, he asserted the Fifth Amendment right to remain silent to all of these questions–

Here is what the lawyer asked Brad in front of the Judge:

“In April, 2015, you testified by deposition that you had approximately $100,000 in your 401(k) as of the date of your deposition, correct?


(I plead the Fifth)


Thereafter, through counsel, you produced a document showing that the current value of your retirement account was over $101,000, correct?


(I plead the Fifth)


At the trial of your divorce on August 12, 2015, through your counsel, you introduced a schedule of property in which you list the 401(k) as having over $100,000 of value, correct?


(I plead the Fifth)


You have wrongfully and without any court order or agreement of your wife or anybody else with the power to agree, you have wrongfully withdrew  approximately $96,000 from your 401(k) in violation of the court’s order?


(I plead the Fifth)


You have secreted those funds and hidden them, correct?


(I plead the Fifth)


You wife was awarded 100 percent — Tamra Decker was awarded 100 percent of that 401(k) that you have wrongfully withdrawn and have hidden from her, correct?


(I plead the Fifth)


You consciously and surreptitiously contacted Fidelity, which is the administrator for your 401(k), and set about a course of conduct with intent to defraud your wife of over $96,000, correct?


(I plead the Fifth)


You still have those funds, do you not?


(I plead the Fifth)


You have the means of identifying where those funds are, do you not?


(I plead the Fifth)


You contacted AT&T or Fidelity, the administrator for AT&T and wrongfully withdrew the 401(k) proceeds from this account in violation of the court’s order, did you not?


(I plead the Fifth)


You had no legal right, nor legal excuse, nor justification of any type whatsoever for this act of violating the court’s order in withdrawing these funds from the 401(k), is that correct?


(I plead the Fifth)


The allegations that we have made in our petition for enforcement are true and correct, are they not?


(I plead the Fifth)


And you wrongfully withdrew over $96,000, plus whatever interest or dividends the account may have made, you have wrongfully withdrawn and withheld that from its rightful owner, Tamra Decker.


(I plead the Fifth)



All of this is in violation of the court’s order, correct?


In Re Decker, Tex: Court of Appeals, 6th Dist. 2017


After this testimony in court, Brad was arrested and put in jail, and ordered to pay civil damages.

*The court has the power to put you in jail for hiding 401(k) money if you are under orders to give the money to your spouse.*

However, Brad successfully appealed the finding of criminal contempt, and was released from jail.  He was able to successfully appeal because it was not proven what order was violated (temporary orders or the decree).

Are There Any Tricks That Lawyers Use to Prevent One Spouse From Touching the Other’s 401(k)? YEs, But tricking people can often amount to fraud

If there is a 401(K) that is not in your control, do you think your spouse is willing to trick you out of 401(K) money by falsifying papers or unfairly negotiating?

Yes, there are some lawyers that are willing to help clients trick their spouses out of money in the 401(k).

It is illegal for lawyers to act unethically, but some do it and get away with it.

But, eventually most tricks used to prevent one spouse from touching the other’s 401(k) can result in the “tricker” being accused of fraud.

For instance, in this case of Russell v. Russell, the husband and wife signed a settlement agreement giving wife $200,000 of the 401(k).  But, then they drafted the final papers, and excluded the $200,000 part!

Wife tried to receive her rightful funds, and husband refused to pay because after all, her award was not in the decree (the final divorce papers)

Since she did not notice the error in her decree until after 30 days had passed, she could not appeal or amend the decree substantively.

The court of appeals in Houston ruled in favor of the husband.  In this way, the tricky paper drafting resulted in wife actually losing out on $200,000 of 401(k) money that was hers.

But, wife is now suing husband for fraud.

When thinking about 401(k) protection, it is good to just understand the general concept fraud.

Spouses can and do get in substantial legal trouble for committing fraud against one another.

Fraud is the common claim that arises against a person for hiding money or tricking the owner out of money.

*To protect your 401(k) be reminded that your decree of divorce should be reviewed carefully because if it does not award you the proper amount of your 401(k), you could lose out on your entire 401(k)*

A lot of people just trust that their lawyer or the judge is going to protect their 401(k) in the divorce.

This is naïve.

You may be inclined to just trust your lawyer to review your papers.

But, you have no way of knowing if your lawyer did that.

So, in the interest of protecting your money,  you need to check it yourself.

What Can You Do If There Could Be a  401(k) That Your Spouse Has Not Told You About


Do you think it is possible that your spouse could have a 401(k) plan that you do not know about?

The recent case of Helm v. Hauser, Tex: Court of Appeals, 4th Dist. 2018 shows that you can add a simple line to your decree of divorce that can actually ensure that you get ½ of any 401(k) account that you learn about after the divorce.

Here’s the deal:

Most of the time, you are going to want to make sure that any 401(k) that you are receiving in your divorce is specifically awarded to you.

This means that the decree says what 401(k) plan specifically is awarded, all  to include the name of the financial institution, a number on the account, and even the balance in the account.

This can leave no question as to what you are awarded “50%” of after the case is over.

But, what about the circumstance when you are not quite sure that your spouse has told you about all of the 401(k) plans they have in their name?

Under the Helm v. Hauser case, if you add this below line to the decree, then you can still collect 50% of your spouse’s 401(k) later, even if you don’t learn about it until after the divorce is over.

Here is the magic line to add:

W-3. Fifty (50%) percent of the community property interest whether matured or unmatured, accrued or unaccrued, vested or otherwise, together with all pro-rata increases thereof, proceeds therefrom, and any other rights related to any profit-sharing plan, 401(k) plan, employee savings plan, accrued unpaid bonuses, disability plan and thrift savings plan or other benefit existing by reason of Husband’s past and present employment as of the date of this decree, as specifically set out in the Qualified Domestic Relations Order entered simultaneously herewith.

Now, regardless of what accounts your spouse has, you own 50% of them as of the date of the divorce.

Some would say that this is too ambiguous, but again, the Helm v. Hauser case shows that the court was willing to enforce it against the Husband.

If you are not sure of the assets in the estate, you should require your spouse to sign a sworn inventory and appraisement prior to signing the final decree.

This is a document that lists all assets, and your spouse swears that it is true and correct with their signature.

Then, if later more assets are discovered, you can recover against your spouse for having committed fraud.

If a Part of Your 401(k) Was Saved PRIOR to Getting Married, Then That Part is Separate Property That Your Spouse Does Not Have a Right To


Was any part of your 401(k) saved before your marriage?

If no part of the 401(k) was saved before your marriage, the entire 401(k) is “community property”, which is subject to being divided in your case.

However, if some money was saved in the 401(k) prior to marriage, this fact is more significant to you than you may realize.

Texas courts strongly enforce the law of separate property, which is what you had before the marriage cannot be touched, whatsoever, by the judge in a divorce.

It must remain with the original owner.

This rule of separate property is a very strong law that judges will always follow.

If some of a 401(k)  was saved prior to your marriage, then the following law applies:

We must start with the presumption that property possessed by either spouse during or on dissolution of marriage is community property. TEX. FAM. CODE ANN. § 3.003(a); Gutierrez v. Gutierrez, 791 S.W.2d 659, 664 (Tex. App.-San Antonio 1990, no writ).

A spouse can overcome the community presumption by tracing.

Tracing money in a divorce is essentially proving the movement of money so that you can show the judge that the money originated with a spouse prior to marriage.

However if you mix up your 401(k) so much so that it is untraceable back to you, then the court will deem it as community property and will divide it between both parties. Gutierrez, 791 S.W.2d at 664-65 (citing Blum v. Light, 81 Tex. 414, 16 S.W. 1090, 1092 (1891)).” Matter of the Marriage of Stegall, 519 SW 3d 668 – Tex: Court of Appeals, 7th Dist. 2017

It is important, for either party to  that you consider the timeline of the 401(k) savings because part of it may be untouchable.

Some people getting divorced refuse to believe lawyers about this and are willing to spend substantial sums of money to fight for a separate property 401(k).  This is a losing battle.

To try to part as friends in a divorce, and thus save money, do not try to fight unbendable laws such as that of separate property.

What they came into with to the marriage, is theirs to keep.

The decree can be worded to state that spouse 1 gets 50% of the 401(k) balance as of the date of divorce, in addition to gains and losses, earned on the same 50% thereafter.

OR, the decree can state that spouse 1 gets 50% of the 401(k) balance as of the date of divorce, and does NOT receive gains and losses earned on the same 50% thereafter.

This gains and losses aspect can turn out to matter a lot, for the actual amount that the spouse receives.

*Make sure that your award of 401(k) money says whether the amount includes or excludes market gains and losses

If your divorce decree or qualified domestic relations order does not say who gets gains and losses, this can result in a lawsuit later.

If Your Divorce Decree is Silent On Who Gets the 401(k), Then Who Gets It?


Who do you think would own your 401(k) after the divorce, if the divorce papers do not award the 401(k) to you or to your spouse and are silent on the issue?

Basically, if your final decree of divorce does not mention a 401(k), and how to divide it, then no one “gets it,” until it is decided later in court.


AFTER a divorce, an ex-spouse can file a lawsuit to divide anything that is owned by the parties which is NOT divided in the original final decree of divorce.  See TEX. FAM.CODE ANN. § 9.201 (Vernon 2006).


So, if you are a person that is inclined to just leave certain things off the table, this is why that is a bad idea.


Not only can you face fraud claims, but just leaving it out, does not leave it protected and in your name, as you may assume.


How the Prenuptial, postnuptial, Partition agreement plays into the 401(k) division- HINT: IT MIGHT NOT BE TOO LATE TO USE THIS TOOL


Did you execute any prenuptial or postnuptial agreements that stated your 401(k) would be your separate property in the event of divorce?

I estimate that about 1% of cases we see involve prenuptial or postnuptial agreements.

Most people do not have this.

But, if you are reading this booklet to know the avenues for protecting a 401(k) plan, you should know this.

A prenuptial agreement divides property contractually and can make it so that after you are married you keep your 401(k) as separate property.

But, you can do the same thing with an AFTER MARRIAGE contract called a partition and exchange agreement.

Sadly, some people get divorced because they see their marriage on the rocks and they want to preserve their own money.

They know that someday in Texas, if they get divorced chances are that they can only keep ½ of their money.

So, they get divorced in a hurry.

A solution is to do a partition and exchange agreement with your spouse and in this way, own your own 401(k) as separate property from him/her, but stay married and try to work it out.

How the Judges Feel About Your 401(K)


There are thousands of pages of cases where former lovers are fighting to the bone for every ounce of 401(k) money they can preserve.


There are lawyers that are out there that are ready to fire you up with hope, and, in exchange for tens of thousands of dollars, they will work hard to present a hell of a case for you.


In the end, the very best that can happen is that the entire room of strangers that make up the judge and jury will think your spouse is a dog that should be punished, and so they will award him/her less of the money.


It will have cost, of course, at least year of time, and who knows what final attorney invoice balance, but you will have won.  That is, in the best case.


In the normal case, you will pay a lawyer a few thousand dollars, and they will go present your case and the Judge will impatiently listen and then afterwards, will just divide your property in ½.


It will leave you feeling like the judge did not hear you or did not understand.


So, here is the advice.  If you and your spouse are fighting over the 401(k), then consider just dividing it in ½.


If you are going to fight this, know that all of the lawyers and all of the judges are sitting heavily on a ½ mark in their mind.


They are pushing you toward dividing it ½.  Budging people from the ½ marker is expensive because it takes a lot of persuading, and thus time.


That all said, in Texas you can move away from the ½ division easily, if you and your spouse agree to do so.


If you come to understanding this perspective that Judges carry into court, in can help you understand how to approach your case in a smarter way.


If you have a question, send it on over to [email protected].