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Do you need to draft a QDRO during your divorce process?

On Behalf of | Jun 12, 2023 | Asset Division

If you’re getting divorced, there are a lot of potential documents to consider. One of these is a Qualified Domestic Relations Order (QDRO). This resource helps to divide the retirement-related assets that a married couple owns as they end their marriage.

One thing to remember about a QDRO is that it can be put in place during a divorce, even if the assets are not going to be accessed by the other person until after the divorce, like a pension plan.

How it works

With a pension plan, someone is earning that plan for the entire time that they are employed. They don’t get paid until they retire, when they get a monthly check to pay them their pension. But they are already earning it through their employment, as it is one of the main benefits that they receive in exchange for their efforts. What this means is that the portion of the pension earned during the marriage is a marital asset.

For instance, say that someone worked for a company for 10 years and then got married. They continued working there for 10 more years and got divorced. Finally, they put in another 10 years before they retired. Only 10 out of the 30 years would qualify to be divided via a QDRO, as the pension being earned was only a marital asset for 10 years total. This means that 1/3 of the value of the pension plan could potentially be divided between the married couple, at least in most cases.

You can imagine how these types of benefits are often overlooked during a complicated divorce. It’s very important for couples to know about all of their legal options. Seeking legal guidance proactively is usually a very good place to start.