What to Know about QDROs in a Florida Divorce
Many divorce settlements require that retirement assets be divided between the spouses. After the divorce is final, a Qualified Domestic Relations Order (QDRO) is drafted which directs the administrator of the pension plan to give a portion of an employee’s pension to the plan participant’s ex-spouse. The drafting of the QDRO can be the source of enormous problems and conflict because of common but avoidable mistakes made by parties to a divorce. When a QDRO is not in place, the retirement plan may pay the entire retirement proceeds to your spouse leaving you limited options to recover your share of the retirement proceeds.
An effective QDRO begins with the settlement agreement
The first step to ensuring that a QDRO accurately carries out the agreement reached by the parties in a divorce settlement begins with the drafting of the actual settlement. Parties to a divorce should seek legal advice or work with a Florida divorce attorney who can analyze the nature of the pension plan to be divided. Every pension plan is different, and there are many questions that need to be answered before an agreement can be reached regarding the division of retirement benefits. How will the agreement treat early retirement buy-outs, supplements, or temporary benefits for example? There are some plans that include benefits that are not subject to division at all. All of these issues must be investigated prior to the parties drafting and executing a marital settlement agreement. We frequently seek information from the pension plan administrator during the discovery process and consult closely with a pension expert prior to finalizing any settlement agreement.
Who should have the QDRO drafted?
It is essential to keep in mind that the purpose of the QDRO is to take retirement benefits from one spouse’s retirement plan and give those benefits to the other spouse. The QDRO is always drafted for the benefit of one spouse and should not be drafted by someone hired by both spouses jointly. The spouse that pays for the QDRO can direct the drafter to create a document that is as favorable to them as possible so it is always in your interest to have your attorney arrange to have the QDRO prepared. Parties should avoid the temptation to use a sample QDRO provided by the pension plan. Although a reasonable guide to what a pension administrator will require in the QDRO, the sample may not address key issues pertaining to the pension and will be a neutral document, which will not enable you to draft the terms of the QDRO to your advantage.
When should the QDRO be drafted?
To be safe, you should attempt to have the QDRO prepared and executed at the same time as the divorce becomes final. If an unfortunate event results in the death of the spouse whose benefits are being divided prior to the QDRO being drafted, the spouse who was to benefit may lose the portion of the pension to which he or she is entitled.
If you or your spouse have a retirement plan, you should seek legal advice from a Florida QDRO attorney who can prepare a QDRO that reflects the terms of your agreement, meets all plan requirements, and contains terms most favorable to your interests.