Sunday, April 28, 2013

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.


Patrick cavill said...

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Anonymous said...

It would behoove Mr. Flynn and other attorneys who think there was a mistake in the QDRO in Williams v Williams, to get their facts straight. There were no mistakes in the drafting of the JOD nor the QDRO. The ex-wife and decedent knew from day one what each document said and neither one wanted to change it.

Timothy P. Flynn, Esq. said...

Well ok then Mr., or Ms. Anonymous, we stand corrected, I think. Admittedly, we have not reviewed the QDRO or judgment in this case to "fact check" whether the Court of Appeals got it right in assessing that a mistake was made in the QDRO.

Boy, we'd pay good money to know your identity; we think we know who you are but are not certain. Professionals, readers, and others, of course, have the option to keep their comments anonymous.

In any event, we certainly appreciate your readership of our divorce blog, and appreciate your comment even more. It caused us to re-read the COA's Williams opinion in which, it sure does appear to us that they concluded that a mistake had been made in the drafting of this QDRO, but that it could not be rectified in the nunc pro tunc manner selected by the family court a decade later. As we attorneys know, mistakes in judgments and orders can only be corrected for one year under the court rules.

Aaron Andrew said...

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