Retirement Benefits granted in divorce to spouse who later passes away

[Guest mlyons]

My mother and father were married for almost thirty years. Pursuant to their divorce, my mother was entitled to 50% of the value of my father's retirement plan as of the date of their divorce. My mother recently passed away in December of 2001, and I am now wondering if that money she was owed needs to be included in the calculation of the value of her estate (and consequently required to be distributed according to her final wishes). I hope someone can help clear this issue up for me. Thanks!!

[david rigby]

Unfortunately, you may have to do some more digging. Federal law that governs pension and profit-sharing plans has stated, since 1974, that benefits under a plan cannot be "assigned". See Internal Revenue Code section 401(a)(13). This meant, among other things, that the court had no right to go after a benefit. Sometimes, judges have a tendency to do what they want, and many courts "awarded" a portion of a benefit in a divorce action, even though it appeard to conflict with the federal law.

To settle this, Congress in effect gave in. In 1984, they re-stated the importance of the "non-alienation" policy, but created a specific exemption for a Qualified Domestioc Relations Order. A DRO must meet specifice requirements in order for it to be "qualified". The result is that a plan can observe the terms of a DRO only if it is a QDRO.

As you state, the divorce "award" occurred prior to the effect of any of these laws. You will probably need advice of an attorney who is well-versed in family law.

One important piece of information is whether any payments had already commenced to your mother before she died. If so, then the terms of that payment likley will govern, for example, a payment of $X each month for your lifetime.

[Guest mlyons]

Thank you pax, I figured I'd end up having to talk to an attorney anyway, but just as a follow-up, does it make a difference if my father is a federal worker and the money was coming out of a Thrift Savings Plan?

[david rigby]

Well as a matter of fact it does. Plans sponsored by government units (county, state, federal) are exempt from many of the same rules that govern other plans. One of the exemptions affects this. Very possible that a govt.-sponsored plan is subject to a judges's domestic relations order without any requirement that it be qualified.

If you ask an attorney for advice, and that attorney does not understand the meaning, importance, effectiveness of QDRO's, then you should probably keep looking.