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Remarriage and QDRO


Guest LouieT

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Guest LouieT

My husband was divorced 28 years ago and the domestic relations order stated that his former wife would receive survivor benefits. However, a QDRO was never drafted or filed with the court. My husband and I married five years ago. My husband is vested and will retire in approximately five years. Do I have any rights to the survivorship benefits? (The pension is a defined benefit.) Also, is there a statute of limitations for filing a QDRO?

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Until a domestic relations order is received by the plan, you have all the rights of a spouse and the former spouse has no rights. Unless a domestic relations order is qualified, the former spouse has no rights, except the right to try to cure any qualification defects in the domestic relations order within a reasonable time, which depends on the circumstances.

Federal law does not impose an limits on timing of issuance or delivery of domestic relations orders. State law may limit the ability of a party to a divorce to obtain or modify orders after the proceeding closes.

In certain jurisdictions, a domestic relations order may be ineffective with respect to the survivior benefit rights of a contingent annuitant under an annuity form of payment if the order is delivered to the plan after the payments start or after the plan participant dies. However, the payments to the participant while the participant is living can be divided even in those jurisdictions.

In short, until the participant retires, your interest is in jeopardy. Once the participant retires, you may have have more protection, depending on the jurisdiction. Even if the former spouse obtains an interest under a QDRO, it would be unusual for an alternate payee to be awarded the entire interest or the entire survivor interest. I have seen QDROs that award the entire pre-retirement survivor interest. It is extremely unlikely to see an order that tries to award a survivorship interest in whatever interest is left to the participant after the normal benefit is split with the former spouse. If the benefit is split before retirement in some way between the participant and former spouse, the former spouse almost never gets any survivor interest in the portion of the benefit that remains for the participant. How benefits are split depends primarily on the divorce terms and state law.

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Very well put Qdrophile. I would just add that it would also be unlikely that the first spouse would have any right to any portion of any benefit that the participant earned after they seperated. Therefore, you would probably have some interest in the piece of benefit that he earned after he seperated with his first wife, even if a DRO was filed.

The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

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Guest LouieT

Thank you for your input. One more question. We are in the process of negotiating the QDRO with my husband's ex-wife. The domestic relations order states that the ex-spouse will receive a portion of my husband's pension, but does not state whether or not the award is for the years they were married. (The order states that the ex-spouse will receive 50% of pension as of date of divorce without addressing the 15 years my husband worked prior to their marriage.) The ex-spouse believes that the coveture fraction should include the 15 years that my husband worked prior to their marriage. Do the courts usually award pension benefits to an ex-spouse for years that they were not married?

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I've seen it done both ways. Just depends on other facts, and other items being negotiated. State law may already say something about this, but it may be a guide rather than a rule.

QDROphile?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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Depends on all the circumstances. Community property states tend to be more formulaic and would tend to award an interest based only on the time of marriage. That would be the starting proposition in any case, but where it comes out depends to some degree on other things, including the interpretation of what was already ordered. A strict interpretation would be that the former spouse interest covers the accrual before the date of marriage, and some courts would not go back to rethink the issue. The court would probably approve anything you agree about. If you want to fight, you take your chances.

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In most states only property acquired during the marriage is included as marital property subject to division in divorce. However, the parties can negotiate their own settlement of pension benefits. You need legal advice on this issue.

mjb

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  • 10 months later...
Guest LouieT
In most states only property acquired during the marriage is included as marital property subject to division in divorce. However, the parties can negotiate their own settlement of pension benefits. You need legal advice on this issue.


Last month we received notification from the plan administrator that the ex-wife filed a copy of the divorce decree with the plan admininstrator and now the administrator has put a hold on my husband's pension. (This is not too urgent because my husband doesn't plan on retiring for a few years, but I am concerned about the survivor benefits if something happens to my husband.)

I would appreciate any advice as to a plan of action from this point forward. Specifically, now that the ex-wife has filed a copy of the judgment with the adminstrator are her rights to the survivor benefits secured?
Again, I appreciate any advice, help that you can provide.
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I dont know what effect filing the divorce decree with the plan will have on your rights. Some courts require that a formal QDRO be approved prior to date benefits commence in order for the ex's rights to be effective against the plan. Some cts will accept the divorce decree if it contains all of the elements for a QDRO. Finally it is not clear from the case law whether th ex will be entitled to survivor benefits based only upon general language of a divorce decree. (The ex may not want to spend $on an attorney to prepare a QDRO). Your H needs to consult with counsel to determine whether the ex has any rights to survivor benefits if no DRO is ever filed.

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Possibly the plan administrator is "holding" your husband's pension as an acknowledgement of a pending QDRO. This is not permanent but ususally gives the ex-wife some reasonable time to complete the QDRO process. This may be included in the plan administrator's written QDRO procedures.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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She has her foot in the door. Whether or not the divorce decree is qualified, it is a domestic relations order and she will have a reasonable time to come up with an order that qualifies. That is why the pension benefits are suspended. Your husband may become involved in (1) the state court if further state court action is required to produce an order that will qualify or (2) the qualification process in any event.

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  • 5 years later...
After the wife filed the DRO with the PA in 2006, she never did anything. Since then the participant retired and started collecting his DB plan. (The PA lifted the restrictions on the participant's pension 18 months after ex filed DRO with PA.)

Now, the ex-spouse's attorney contacted the participant's attorney to say that she is willing to sign the QDRO proposed by participant in 2008.

The problem: it has been more than ten years since the benefit accrued. The participant and his attorney feel that the statute of limitations has already passed. They are ready to fight in court and participant has a lot of money set aside and is ready to fight because he has been anticipating something like this.

Any opinions on whether it is worth participant's time and money to fight the late post-retirement QDRO? (The portion of the pension that would be payable to AP is not a very large amount, but participant has been retired for several years and does not want to give up even a small portion of his pension.)

The ex's attorney has contacted your husband's attorney b/c he knows that the time for getting a QDRO approved has expired. The plan may decline to approve the DRO at this point because benefits have commenced.

If the ex spouse did not have a QDRO approved by the plan admin before the participant began receiving benefits it will be very difficult for the ex to get spousal benefits b/c the federal courts determine eligibility for benefits based on the date of retirement. If you are married on that day and there is no QDRO approved by plan admin it is highly unlikely that the ex would prevail expecially where the ex spouse delayed accepting the QDRO before your husband retired. Also the plan would not accept the ex as spouse as spousal beneficiary b/c at the time benefits commenced it determined its payment to the participant based on your life expectancy. Substituting the ex could require that the plan pay a higher level of beneft is than it expected to pay because of the different life expectancy of the ex whic h is not permitted.

The ex's claim for benefits could also be barred under the doctrince of latches - her unreseaonable delay in asserting the claim coupled with detriment to the participant due to change in benefits to be paid.

Your husband needs to discuss his options with his attorney as there are many other issues that need to be addressed such as whether the ex would be entitled to 50% of his pension benefits even if she is not eligible for survivor benefits.

mjb

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