After a Divorce - QDROs Need To Be Implemented

Monday, June 8, 2020

    Many General Judgments of Dissolution (sometimes called Divorce Decrees) require retirement assets be split, or require some retirement assets to be transferred or assigned to the owner’s former spouse.

    This is NOT done by the General Judgment of Dissolution, although it will be required by the General Judgment of Dissolution.

    This is done afterwards, by a QDRO (Qualified Domestic Relations Order).

    There is an extra cost for this, and generally the lawyers who draw up these QDROs and/or who review them for the other party, specialize in drafting QDROs.

    Most divorce lawyers do not do their own QDROs, since this is specialty work.

    Sometimes after a divorce is over, the parties decline to pay the specialist to put a QDRO in place.

    Sometimes the person who has been ordered to give up some or all of a retirement asset that is in their name thinks they are better off if the other side does not push the issue, and if the retirement asset is never divided or assigned to their former spouse.

    The trouble is, there is a legal requirement that this be done.
    While it is comparatively simple to do this shortly after a divorce (especially if the Judgment of Dissolution has been well written, with the division or assignment of these assets properly spelled out), this can be VERY complicated years later.

    This is particularly true if the person has continued to contribute to the retirement asset after the end of the marriage.
    It is even more complex if the person has actually retired, and started pulling from the retirement asset.
    It can be hugely expensive, and very stressful to try to split these assets, as required in the General Judgment of Dissolution, after any significant amount of time has passed.

    It can be even more stressful if the person has planned their retirement around the idea that they will get to keep all of their retirement assets, since the other side has not pushed them to reassign or split the asset in the years since the divorce.

    It can be a very great shock for the retiree to find out, at that point, not only that they need to pay thousands of dollars more in legal fees than they would have had to pay if the QDRO had been put in place shortly after the divorce, but also that their retirement assets are significantly reduced by the amount that needs to be reassigned to their former spouse.  

    This reduction in one’s anticipated retirement assets will NOT be just the amount that existed at the time of the divorce.  This transfer to the former spouse will likely include all of the increase that has accrued due to the return on investment on the former spouse’s share over the years.  This can be a very complex calculation, particularly if the person has continued to contribute to the retirement asset following the divorce, and even more if the person has also made withdrawals from the asset, either early, or in the ordinary course of their retirement.