WHEN SHOULD I CONSULT EZ QDRO LAW?

The answer is simple: the sooner the better.

The difference between a negotiated result and an unintended consequence is measured by your client’s time and money. When benefits and options are overlooked in settlement or at trial, whichever the side of the windfall, nobody wins. Post-decree litigation aimed at resolving one party’s surprise is as avoidable as it is expensive and frustrating… for both sides. Avoid post-decree headaches: get it right, pre-decree.

Pre-Decree
If either party has complex financial assets, retirement, or other deferred income, Eileen can help address key issues and resolve potential disputes early in the negotiation process.

For instance, it is not uncommon that defined contribution plans or other financial accounts (for example, an IRA, 401(k), brokerage, 403(b), 457(b), ESOP, profit sharing, or savings plan) will include contributions and/or rollover balances that existed prior to the marriage. The amounts at stake can end up being significant, therefore an early and thorough assessment of any separate property claim is a must. Take the following example:

At the time of divorce, your client was participating in a 401(k) plan with her current employer. Your client knew she started working for her employer before the marriage, but she did not have any plan documents to substantiate the balance of the 401(k) as of the date of marriage.

Instead of settling on a standard 50-50% division of the 401(k) plan, you contacted EZ QDRO LAW. Eileen was able to help you obtain account statements for your client’s 401(k), going all the way back to the date of marriage.

It turned out that the balance in your client’s 401(k) on her date of marriage was $173,364. At the time of the divorce, the account had grown by $251,266 to $424,630. Eileen performed a passive growth trace analysis of the statements, revealing that of the $251,266 increase, only $144,290 was due to contributions and passive market growth during the marriage. Therefore, your client protected $280,339 as her separate property interest, in addition to her half of the marital $144,290.

Because of your due diligence in contacting EZ QDRO LAW early in the process, your client ended up with $352,485 (and her spouse with $72,145). If you had waited until after settlement, or until time to draft the QDRO, your client would have been left with only $212,315.

On the flip side, if you represented the spouse instead, and he ended up with $212,315 (instead of $72,145), it would likely be just a matter of time before costly post-decree litigation commenced in attempt to reclaim the separate property interest. Successful or not, the one sure result is more time back in court for your client too, a sequel he may not have anticipated.

For both sides… unnegotiated outcomes are at best unpleasant and expensive, and disadvantageous at worst.

Post-Decree
Nothing feels worse than a post-decree headache. Eileen can help you quickly navigate post-decree issues and determine best potential outcomes.

For instance, Eileen can confirm whether the QDRO documents conform to the decree or verify whether the plan interpreted the QDRO documents as intended by the parties.

Eileen can also help assess the best strategy to employ when something goes unexpectedly awry, after-the-fact. For example, was a QDRO never entered at all?

It starts when your office phone rings and the frantic potential client on the other end of the line tells you that she divorced twenty years ago, and the parties’ agreement awarded her a share of her ex-husband’s pension. She explains her daughter informed her that her ex-husband is about to retire and start receiving a handsome monthly pension check from his prior employer, payable for the rest of his lifetime. She asks, “will I get my share now too?” Your answer is of course, “no.” First, retirement plan documents must be obtained so a QDRO may be drafted. Then, once the QDRO is drafted, it must be approved by the parties, the Court, and finally the Plan.

Because you called EZ QDRO LAW as soon as you hung up the phone, you were able to identify and favorably resolve a critical issue before having your client sign off on any court documents. Eileen explained that if ex-husband retires before a QDRO is approved by the Plan, and elects a single life annuity, the benefit will cease to be payable upon his death. This means that if ex-husband dies just one month after his retirement, your new client will not receive another penny under the QDRO.

The parties had agreed all those years ago that both were to receive a lifetime benefit, and so Eileen helped you work with ex-husband’s counsel to postpone ex-husband’s benefit commencement just long enough to be able to have the Plan approve a QDRO that would allow for your client to receive a lifetime benefit. If you had waited to reach out to Eileen, your client would have missed out on receiving a check twelve times a year, guaranteed for the rest of her life. The monetary loss could have been staggering for your client. Not to mention the added time and expense of heading back to court… for both sides.

Other post-decree QDRO headaches to watch for:

• Did the plan reject your QDRO?

• Will the plan not accept a QDRO at all?

• Did the plan pay the wrong party?

• Did the participant take a distribution before the QDRO was accepted by the plan?

• Was there an unintended tax consequence?

• Did one of the parties die and the benefit stopped?

• Did the parties’ agreement and/or decree fail to identify/divide the retirement benefit altogether?