QDRO Specialist A Necessity in Divorce Judgments
When a couple divorces with retirement assets, a special order is needed to divide those assets known as a Qualified Domestic Relations Order or QDRO. Every employer’s plan is different and has distinct and specific requirements for the QDRO.
These specifics have given rise to the cottage industry of the QDRO speacialist: a lawyer that is hired at the time of entry of the judgment of divorce for the sole purpose of drafting the QDRO.
Last month, the Michigan Court of Appeals decided Williams v Estate of Williams, a case involving a very old divorce judgment that affected the retirement benefits of a deceased Ford Motor Company employee. The Wayne County Family Court attempted to go back over a decade into the past to correct what it perceived as a mistake in the division of the employee’s pension, but the Court of Appeals reversed the trial court.
When the employee, the participant, finally retired after 39-years at Ford, the alternate payee on the plan, i.e. the ex-wife, began receiving her portion of the pension. The ex-wife was designated as the “surviving spouse” in the QDRO, and began receiving the entire amount of the pension despite the fact she never intended on that result.
The judgment and subsequently entered QDRO awarded 100% of the decedent’s pension to his ex-wife after the participant’s death. If the QDRO had been drafted in accord with the default judgment, the alternate payee’s share should have been the same as it was when the participant first entered into “pay status” upon his retirement.
The case is instructive on several fronts:
- The parties to a divorce should hire a specialist to draft any necessary QDROs;
- Be sure that the language of the QDRO and the judgment of divorce are consistent;
- If the plan administrator corresponds to the parties through the specialist, do not ignore this correspondence as it could spell doom years, even decades later;
- Do not attempt to draft a “do-it-yourself” QDRO; and
- Be careful not to “incorporate” the QDRO into the judgment itself because this will limit your options to correct the problem years later, which is what happened in the Williams case.
Often, when a divorce proceeding is grinding down toward a settlement, the parties take their focus off the specific language of a QDRO. This is most often a mistake, as the division of the retirement assets is one of the most important aspects of the divorce.
Take care to follow-through with your attorney to accomplish this task.