Retirement and Divorce

With roughly 50 percent of marriages ending in divorce today, societal critics along with the media have been quick to point the finger at the younger generations, insisting their reckless approach to life is to blame. Contrarily, in spite of this widely embraced misconception, divorce is actually equally, if not more common among long-term couples closing in on retirement age. In view of these facts, it is crucial for one to be properly prepared and informed about the formalities of the division of conjugal assets, which includes one’s retirement benefits. Seeking information from a Houston divorce attorney such as Hiller Law is especially important for the unemployed spouse, as they have the tendency to unsatisfactorily claim what is rightfully and legally theirs, typically due to a lack of legal knowledge.

Qualified Domestic Relations Order (QDRO)

A QDRO, which is either ordered or approved by the court, is the allotment of a spouse’s retirement plan or savings to a previous spouse, spouse, child or another entitled dependent.

This order is put into effect prior to the finalization of a divorce or a legal separation. The allotment of a QDRO is especially applicable to a 401k plan. A QDRO facilitates the employer when administering a share of the plan to the employee’s opposing party. It is often the case that a client or even a divorce attorney assumes that a drafted divorce agreement is sufficient for the protection of their assets and/or interests. This, unfortunately, is not the case, intensifying the grave need for a well-prepared QDRO.

No shame in asking for help

The division of a retirement plan is very complex, not to mention quite confusing. It is encouraged that one prepare the necessary documents as early on as possible and to then further enlist the help of a professional, who would ideally be a QDRO specialist. This is due to the fact that even seasoned divorce attorneys tend to enlist the help of QDRO experts.

Complete the QDRO before finalizing the divorce settlement

Another common mistake made by those seeking divorce or separation, is the failure to complete the QDRO prior to the dissolution of the relationship. Constructing and finalizing the QDRO before the actual division of the retirement plan enables the unemployed spouse to request additional compensation in cases where the QDRO is rejected by the pension plan. This, accordingly, allows for the alternate payee to be compensated accordingly.

Going through the motions of a divorce settlement is both emotionally and financially draining. It is therefore important to know what to do, how and when to do it and who to ask for help in order to have a financially sound post-divorce future.