When drafting Judgment language to divide a pension subject to division with a subsequently prepared qualified domestic relations order (“QDRO”), the family law practitioner should create language in the Judgment sufficient to place a hold on the pension until a QDRO is entered. (Please note that “QDRO” in this article refers collectively to all types of pension divisions, private and public.) For most plans, public and private, a Judgment that identifies the plan, the parties and provides some sort of pension division is a domestic relations order (“DRO”) that will at least place an administrative hold on a participant’s pension. A hold on the pension is necessary to ensure that a participant does not retire, withdraw funds, or take out loans, all of which would adversely affect the nonmember spouse’s interest in that pension. In addition, a DRO should include survivorship language to protect, to the extent possible, a nonmember spouse’s survivor rights to benefits should a participant die before the QDRO has been completed.
Caveat: Joinder pleadings are not DROs and in many cases do not protect the nonmember spouse’s interests in the pension. Also, without a QDRO in place, some plans, including military and federal employee plans, will not withhold benefits and a nonmember spouse’s right to survivor benefits could be extinguished. Discussion of these issues is beyond the scope of this article.
FL-348 was created to help family law attorneys draft a DRO acceptable to the majority of plans in bifurcation cases so that nonmember spouses would not be cheated out of their rights to benefits before a QDRO is filed. The survivor benefit language in FL-348 also adequately protects a nonmember spouse’s survivorship rights in most cases. The language in FL-348 helps protect against any omitted pension. In addition, because the division language is general, FL-348 allows for a QDRO attorney to determine the fairest way to divide that asset. (Caveat: Most defined contribution plans should not be divided with the Time-Rule while most defined benefit plans should be divided with the Time Rule. In some cases, the family law attorney would also want to have language citing division by the Time Rule with a defined benefit plan.)
The pension division language in FL-348 is as follows”Each party identified above is provisionally awarded without prejudice, and subject to adjustment by a later domestic relations order, a separate interest equal to one-half of all benefits accrued or to be accrued under any retirement plan in which one party has accrued a benefit, including but not limited to the plans listed below, as a result of employment of the other party during the marriage or domestic partnership and before the date of separation. In addition, pending further notice, the plan must, as allowed by law, or as allowed by the terms of the plan in the case of a governmental plan, continue to treat the parties as married persons or domestic partners for purposes of any survivor rights and benefits available under the plan to the extent necessary to provide for payment to the surviving spouse or domestic partner of an amount equal to that separate interest or of all of the survivor benefits if at the time of death of the participant there is no other eligible recipient of the survivor benefit.”
If you use this language in a Final Judgment of Dissolution, you may want to take out of the first clause the words “provisionally” and “without prejudice, and.” Also, remember to list the plans and which party is a participant in which plan. Or, you can incorporate important elements of FL-348 language in your existing pension division Judgment language.
One more important point is after the Judgment is filed hopefully creating a DRO, it is always a good idea for the family law practitioner to serve that Judgment of Dissolution on the plan(s) named in the Judgment. Most plans will treat the Judgment as a DRO to be reviewed, place a hold on participant’s account, allow the nonmember spouse time to prepare a QDRO and protect the nonmember spouse’s interest in the pension until a QDRO has been filed.
Legal Disclaimer: This information is for general informational purposes only. It should not be construed as, and does not constitute, legal advice on any specific matter, nor does this article create an attorney-client relationship.