Divorce is difficult for anyone at any age, but if you are approaching retirement age, protecting your long-term best interests must be your top priority in a divorce.
In Southern California, anyone who is divorcing must be represented by an experienced Orange County divorce attorney who knows how to protect your retirement funds – or how to obtain your rightful share of your partner’s retirement resources.
WHAT HAPPENS TO MARITAL PROPERTY IN A CALIFORNIA DIVORCE?
In every California divorce, the assets and properties that the spouses have accumulated during the marriage will be divided, including vehicles, homes, and any other assets and properties.
When you have substantial retirement funds, or when your spouse does, you must be represented by a divorce lawyer who can ensure that the totality of the marital assets – including retirement funds – are fairly and accurately divided and distributed.
In California, the standard division of assets may not extend to your partner’s retirement plan. That’s why your attorney may need to request a qualified domestic relations order or “QDRO.”
WHAT DOES A QDRO DO?
A QDRO is a legal order issued by a California divorce court for dividing a private retirement plan – such as private pension plans, IRAs, and 401(k)s – with an “alternate” payee, the ex-spouse.
In the legal language of a QDRO, the partner who earned the retirement benefit is the “participant” and the spouse who receives part of that benefit is the “alternate payee.” A QDRO awards benefits to the alternate payee as well as survivor benefits if the “participant” dies.
A QDRO is not automatic in a California divorce, even if your ex-spouse has a considerable amount in a retirement fund. Your divorce lawyer will have to petition the court for a QDRO as a part of the property settlement.
WHAT RETIREMENT PLANS DOES A QDRO COVER?
A retirement plan targeted by a qualified domestic relations order must be a plan that is covered by the Employee Retirement Income Security Act (ERISA) of 1974.
Military and most government pension plans are not usually covered by QDROs and are more difficult to divide than a private retirement plan after a divorce, so speak with your divorce lawyer regarding your options and alternatives.
Under federal law, a retirement plan may be divided between ex-spouses only if a QDRO is issued by a state court. A divorce decree alone is not enough to divide a retirement plan.
WHAT ARE THE RULES REGARDING THE DIVISION OF MARITAL PROPERTY?
The division of marital property begins when both spouses file a declaration of disclosure which lists all of the property accumulated by the partners during the course of their marriage. Spouses must fully disclose their assets, incomes, expenditures, and debts – including retirement assets.
The spouse who initiates the divorce must file a complete financial disclosure when the divorce papers are filed or in the next sixty days. The other spouse must file a complete financial disclosure with his or her response to the divorce petition or in the next sixty days.
Under California law, anything with value must be included in the disclosure, and any failure to disclose an asset or property could have considerable legal consequences.
The assets are then the focus of settlement negotiations. Whenever spouses can reach their own agreement concerning marital assets, including any retirement accounts, it’s always preferable to a court-imposed resolution, and it saves both sides time, money, and unnecessary aggravation.
If the divorcing spouses can craft a financial agreement that does not include dividing a retirement account, a QDRO is not needed.
WHEN WILL YOU NEED TO REQUEST A QDRO?
However, if you acquire part of your ex-spouse’s retirement funds through either a negotiated settlement or a court order, the judge will sign a QDRO and have it sent directly to the appropriate pension or retirement plan administrators.
If you need to request a QDRO, talk with your attorney and have the request made as early as possible in your divorce proceeding. Then the court can finalize your divorce and the division of properties and assets at the same time.
Although you may request and obtain a QDRO years after a divorce is finalized, it is clearly better to request a qualified domestic relations order as early as possible.
Your divorce lawyer will prepare the QDRO for the judge’s signature. A qualified domestic relations order request must be completed accurately.
HOW CAN A CALIFORNIA DIVORCE LAWYER HELP?
In southern California, have an Orange County divorce attorney handle the QDRO paperwork on your behalf, because any mistake could cost you significantly.
If you are the spouse with the retirement plan, being on the receiving end of a QDRO is not good news. Your divorce lawyer may suggest offering another asset or consideration in exchange for a share of the retirement plan.
However, if you are the spouse with the retirement account, and if that account is divided by a QDRO, the QDRO protects you from any early withdrawal penalties or taxes for funds that are transferred to your ex.
Retirement resources are sometimes the most important asset in a divorce. Before you initiate a divorce in California, or as soon as you are served with divorce papers, arrange to speak with a trustworthy divorce attorney.
WHAT ELSE IS IMPORTANT TO KNOW?
If your divorce in Southern California is currently pending and you’re already represented by an attorney, be sure that your attorney knows about your spouse’s retirement assets and knows that a qualified domestic relations order may be required.
If you are on the receiving end of a QDRO, your attorney may recommend that you make a settlement offer early in the divorce process. In any divorce that involves significant assets, the lawyers for both spouses will comprehensively examine and investigate both partners’ finances.
You must have an experienced California divorce lawyer aggressively advocating on your behalf if you or your spouse has a significant retirement account or other substantial assets.
When you divorce – or when you expect to divorce – you must be advised by a good divorce lawyer who will protect your rights and interests. Legal advice and representation – from the very beginning of the divorce process – is your right