One of the most misunderstood issues in a divorce is the division of retirement accounts and pensions between the divorcing couple. Parties to a divorce risk losing money and benefits because of mistakes made in this area. Here are 10 tips to be in control of your rights and protect your money.
1. Retirement pensions and accounts are marital assets.
Just as bank accounts, the family home, and other property such as cars, a boat, furniture, and other items are divided between a couple that is divorcing, retirement pensions and 401k accounts earned during the marriage are also subject to division because they are considered marital assets. Usually, retirement pensions and accounts are the biggest asset to be split in a divorce.
2. How do you get a portion of your ex’s retirement benefits?
When a portion of one of the spouse’s retirement benefits is awarded to the other spouse during a divorce, a document known as a QDRO, also called a Quadro, (Qualified Domestic Relations Order) is necessary to enforce the award. If the retirement is through the military or civil service, a similar document is also necessary. Without a QDRO or similar court order, you cannot receive your former spouse’s retirement or pension that was awarded to you.
3. Who should you hire?
Only a few attorneys focus solely on QDROs or similar documents and have worked with retirement plans. These QDRO attorneys are best qualified to prepare a QDRO on your behalf, or to review a QDRO that your former spouse’s attorney prepared. It is wise to retain your own QDRO attorney.
4. You need your own QDRO attorney.
QDROs are NOT neutral documents. Each party needs their own QDRO attorney to either prepare the QDRO or review the QDRO prepared by the former spouse’s attorney. Both parties need an individual QDRO attorney who will look after his/her interests. Be wary of anybody offering to prepare a QDRO for you and your former spouse, “representing” you both simultaneously.
5. DON’T risk losing substantial amounts of money.
Each party is at risk of losing a lot of benefits (meaning, substantial amounts of money) when the QDRO is not properly written. Preparing or reviewing these documents in connection with a divorce has to do more with retirement plan law than family law. A QDRO attorney with experience working with retirement plans is well qualified to write a QDRO properly.
6. DON’T use Model QDROs.
QDROs need to be written specifically for the parties. Little words make a BIG difference in the world of QDROs. Do not trust Model QDROs or those run of the mill do-it-yourself QDRO sample websites, which cannot be properly tailored beyond just adding your name and contact information.
7. DON’T waste time!
A lot could be lost if the QDRO is not drafted promptly within a reasonable time after the divorce. The more the parties delay in having a QDRO prepared and approved (in particular the party who is to receive benefits from the former spouse) the bigger the risk of losing retirement monies if something happens such as if, the former spouse dies, re-marries or retires. Get your QDRO attorney on board as soon as possible.
8. DON’T limit yourself.
It is not necessary to have a locally based QDRO attorney because federal law regulates most of the retirement plans to which a QDRO applies. A QDRO attorney can write QDROs for anybody, anywhere in the country.
9. DON’T be fooled!
Do not assume that the Judge will be analyzing if the QDRO is written to be most beneficial to you or that the retirement plan’s approval of the QDRO means the QDRO is fair to you. The retirement plan administrator may have easily approved a QDRO regardless of whether the QDRO actually protects your interests. The plan administrator’s approval of a QDRO only means the QDRO meets a few basic legal requirements. The Plan approval does not mean that the QDRO is good enough to protect your interests.
10. It is worth it!
Hiring a QDRO attorney in addition to a divorce attorney does not necessarily mean it will cost you more. QDRO attorneys usually charge a flat fee. It is well worth it to hire somebody who is a QDRO attorney with considerable background in retirement plans to prepare or review a QDRO for you. The benefit of your own QDRO attorney (your interests will be properly protected) far outweighs the cost (usually a flat fee).