How to Avoid QDRO Malpractice – Transcript
Hello, I am QDRO attorney Veronica Silva and I want to share with you some tips on how to reduce your risk of malpractice liability when it comes to Quadros.
Also, at the end of this video, I want to give you a free gift – and I really mean free. All you have to do is accept it. So, let’s get right to it.
To reduce or eliminate your risk of Quadro (QDRO) malpractice in the future you need to know the three most common mistakes done with Quadros which bring a huge financial detriment to your clients – making them very unhappy with you – and we all know unhappy clients are most likely to sue for malpractice.
The number one most common mistake is to not prepare the Quadro early on – and by that I mean –at the same time as you are negotiating the division of all other marital assets.
You must avoid doing Quadros post-decree– that is a silly thing of the past.
Instead, you should aim to have the Quadros (QDRO) pre-approved by the plan before the actual date of the dissolution of the marriage. You see, there are mutliple issues that will only come to light while you are in the process of preparing the Quadro (QDRO). By preparing the Quadro at the same time that you are negotiating the MSA for your client, you’ll have all those issues available to you and you will be able to better negotiate for your client.
Doing Quadros post-decree is an innocent delay that causes a domino effect of negative consequences, which brings me to most common mistake number two.
The most common mistake number two is not properly addressing survivor benefits and beneficiary’s issues in a defined benefit plan such as a pension. This has BIG NEGATIVE impact in situations of multiple spouses, children and step-children (and it affects both sides, whether you represent an alternate payee who may be the 1st or 2nd spouse, or whether you represent the participant who may later re-marry).
When you don’t properly address survivor benefits and beneficiaries issues, you are actually shortchanging your client in several ways.
An alternate payee will not see a penny if the participant were to die prematurely.
Also, the participant will miss the opportunity of having his full pension benefit restored, if the alternate payee were to die first.
Also, the marital portion is overvalued because the cost of providing survivor benefits is not taken into account at the time of the valuation.
And now let me share with you the most common mistake number three.
Most common mistake number three. It happens when Quadros for account based plans, like a 401(k) when the split of the account is done via a percentage.
In these situations, most Quadros will NOT properly deal with the loan and the delayed contributions issues.
When the loan is not properly addressed in the Quadro, the alternate payee stands to lose thousands of dollars.
This should be a very simple issue to tackle in a Quadro (QDRO), but I have seen QDRO experts make this mistake time and time again.
Also, in some plans, contributions that correspond to the period of the marriage are actually credited at a later date. As a result, the account balance taken into account at the time of divorce will be missing those contributions although they do belong to the period of the marriage and should be included in the marital portion.
This concludes the three most common mistakes I wanted to share with you today.
Don’t miss many other valuable tips that will help you negotiate better marital property divisions for your clients. Just follow the link below for my youtube channel.
Also the gift I promised you. It’s a free copy of my Guide to Retirement Plan Subpoenas.
Please click on this link and let me know where would you like to receive your free gift.
I do not like to spam people and I respect your privacy. I will not give out or sell your email address.
Thank you for watching! ‘Till next time!