QDRO does not reflect Marital Settlement Agreement

[Dazed and Confused]

It was discovered when I brought a copy of my Marital Settlement Agreement and my QDRO for my 401k plan to my financial advisor that my premarital portion was subtracted from the balance on the date the divorce was entered and the remaining balance was split 50 - 50.

How ever, the marital settlement agreement states that my premarital portion was to be identified and that it would then be treated as if it made 5% interest annually for the 20 years that I was married. This new amount would then be subtracted from my 401k balance (a much larger amount) and the remaining balance split 50 - 50.

At the time of signing the QDRO my lawyer advised me that the document looked proper and followed what all parties had agreed to in the divorce. (I always asked before signing anything if there was anything that was changed from a draft or not in my best interest since most of this paperwork is confusing and I am paying him for his expertise in the matter.)

The marital settlement agreement has never been amended.

If the QDRO does not match the marital settlement agreement filed and no amendments have ever been made since that filing, is the QDRO valid?

Can it be amended since certain portions of the marital settlement agreement were omitted from the QDRO?

This omission was missed by both lawyers.

I believe the QDRO was prepared by my xwifes attorney.

I live in Illinois.

My ex-wife has already received her portion of the 401k (including the 5% portion of interest that was awarded to me via the marital settlement agreement)

Thank you

[jpod]

It is extremely unlikely that you have any claim against the plan or anyone involved in the administration of the plan.  You should contact your lawyer and find out if he can get this fixed in some fashion that makes you at least close to whole (at which point he probably will contact his insurance carrier because he knows he may have some exposure if he cannot get it fixed).  If that lawyer is not interested in talking to you then you should contact another lawyer. 

[ERISAAPPLE]

You might have a malpractice claim against  your attorney, but that is going to be a tough row to hoe.  For starters you could have statute of limitation issues, and the amount involved may not be worth the cost and effort of pursuing the claim.   

[Draper55]

I don't think the list of requirements for a DRO to be a QDRO include an accurate reflection of the parties intent as expressed in the language of the MSA. I am not a lawyer but I think ERISAAPLE is of the right mind in this regard...

 

[jpod]

Not sure what ERISAAPPLE and draper1 are getting at.  Based on the facts presented this looks like slam dunk malpractice:  the lawyer did not make sure the DRO was drafted in accordance with the clear intent of the parties as expressed in the MSA.  There could be a statute of limitations defense, but that doesn't mean there wasn't malpractice.  

[fmsinc]

Your lawyer is guilty of malpractice.  If he didn't know how to review a QDRO implementing an Agreement then he should have referred you to someone who could to so.  The language of the Agreement sounds like it was well drafted.  All that needed to be done was to get the value at the time of the marriage, take that amount at the agreed 5% simple interest to the date of divorce, and divide the balance 50%.  You did not get the non-value of your premarital share restored to you.  By the way, most 401(k) plans can do that computation for you at the actual rate of growth.    

Contact the lawyer and have him file a Motion to revise the QDRO and and find someone competent to prepare it.  I will give the benefit of the doubt to the other lawyer that he was not being "slick" as we say in the law.   Tell your lawyer that you expect him NOT to charge you for his time and to pay the cost of the revised QDRO.  If he gives you any push back tell him you will hire someone else and sue him to recover your fees and costs, and perhaps report him to Bar Counsel (Grievance Commission).  

I see this sort of thing happen 2 or 3 times a week.  The Rules of Professional Responsibility make it clear  that a lawyer must be competent and this requires him/her to stand in his/her area of the law - stay in his lane.  It's like a plumber trying to do electrical work.  

Good luck.  

[QDROphile]

What is a revised QDRO going to do?  The plan is out of the picture with respect to money distributed under the original QDRO.  If the former spouse rolled over the distribution (or enough of it), it may be possible to get the domestic relations judge to order a transfer of a corrective amount from the former spouse IRA to an IRA of the plan participant.  

[jpod]

Of course revising the QDRO will accomplish nothing.  There may be recourse against the ex-spouse, which the lawyer should try to achieve without charging a fee; otherwise, his insurance company may be happy to have this go away.  

[ERISAAPPLE]

I was 

19 hours ago, jpod said:

Not sure what ERISAAPPLE and draper1 are getting at.  Based on the facts presented this looks like slam dunk malpractice:  the lawyer did not make sure the DRO was drafted in accordance with the clear intent of the parties as expressed in the MSA.  There could be a statute of limitations defense, but that doesn't mean there wasn't malpractice.  

My intent was to reflect that any malpractice suit is going to be difficult.  In a malpractice case, most states require you to hire an expert witness.  You also generally have to prove two cases.  The first case you have to prove is you are entitled in the first place.  The second case you have to prove the reason you lost that entitlement, when you would otherwise have won, is because of the attorney's malpractice.  On top of that you have to deal with the usual costs, time, and delays that inevitably comes with any litigation.

I agree that the OP has a good case assuming the facts as presented and assuming there is no SOL problem, but nonetheless prosecuting any case to completion and collection can be quite burdensome and and expensive.

  

[jpod]

I am not a malpractice lawyer, but I think in this case the malpractice is evident without the need for an expert (assuming the facts stated are true) and the damages are likely modest, so the insurance company will not want to waste time or money on this, assuming no good SOL defense.  Naturally I am also assuming that the lawyer has coverage.  On the other hand, if the damages are less than the deductible that could throw a monkey wrench into the works, although I don't know why the attorney would want to defend a small lawsuit that is going to make him look so bad.   

[ERISAAPPLE]

2 hours ago, jpod said:

I am not a malpractice lawyer, but I think in this case the malpractice is evident without the need for an expert (assuming the facts stated are true) and the damages are likely modest, so the insurance company will not want to waste time or money on this, assuming no good SOL defense.  Naturally I am also assuming that the lawyer has coverage.  On the other hand, if the damages are less than the deductible that could throw a monkey wrench into the works, although I don't know why the attorney would want to defend a small lawsuit that is going to make him look so bad.   

Don't get me wrong.  I think the plaintiff would have a good chance of success, which is why I mentioned it in the first place.  I'm just saying it is not necessarily going to be easy.  In a legal malpractice lawsuit you have to try "a case within a case": that's why there are two cases.  It may be that both cases here would be relatively simple to win.  But no litigation should be pursued lightly.    

As in almost all cases, you start with a demand letter and hope the attorney would just pay.  

 

[jpod]

Agreed, but he may not have to pay if he can get it fixed as I described.  I have to think that the ex-spouse has some exposure to a claw-back notwithstanding the QDRO, but that involves local domestic relations law which I know nothing about.

[Dazed and Confused]

Thank you for your feedback.

I will contact them although I am not fond of using them. At the end of this whole divorce process the final bill had an interest charge of approx. $4000 when every monthly statement I had up until then showed an interest balance of $0.