Here I am dead and my ex-wife (ex-husband) got all of my retirement!?
It is common for a Separation and Property Settlement Agreement to be reached in a divorce situation where retirement benefits are divided up. When one spouse’s retirement is split up and a portion is given to the other spouse, family law practitioner’s know that a Qualified Domestic Relations Order (“QDRO”) is required in addition to the agreement document. However, due to off-setting of funds, one spouse generally has a retirement account that remains unmolested and sometimes each spouse keep their retirement wholly as their own through negotiations. In this latter situation, a QDRO is not required and so they are rarely prepared and entered with the court and the plan administrator. A recent Supreme Court of the United States (“SCOTUS”) decsion, KENNEDY, executrix of the ESTATE OF KENNEDY, DECEASED v. PLAN ADMINISTRATOR FOR DuPONT SAVINGS AND INVESTMENT PLAN et al., Decided January 26, 2009(available here at Findlaw) points out the danger assuming the divorce’s settlement agreement wraps up loose ends regarding retirement accounts.
In the Estate of Kennedy case, Husband and Wife entered into an agreement where Wife gave up her interest in Husband’s savings and investment plan (“SIP”) that was governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). The divorce was granted and the settlement was accepted by the courts. Husband’s attorney did not see the need for a QDRO and Husband assumed that was that and never changed his designation of beneficiary with the SIP administrator. When Husband died, the SIP administrator disbursed the remaining funds to ex-Wife. Everybody else got a bit peeved over this and sued in Federal District Court because it involved a question of federal law under ERISA.
Without getting too far into the analysis, SCOTUS decided to keep things simple and straightforward for plan administrators: either you do a QDRO or you change your beneficiary. The plan administrator is to look to the documents of the plan under ERISA to determine where the money goes avoiding complicated inquiries into a person’s intent. While a QDRO is an exception to this that could require the administrator to look outside of the plan documents, such an inquiry would be limited.
The lesson here is that if your are able to keep your retirement accounts intact through a divorce, you cannot rely on the divorce settlement agreement to direct those funds upon your death. You must either change your designated beneficiary, or have a QDRO entered – changing your beneficiary is by far the simplest and least costly of those options. Family lawyers need to provide their clients with follow-up directions at the end of a divorce to tie up loose ends such as changing beneficiaries for retirement accounts.
1 Comment »
Leave a Reply
-
Recent
- Section 341 Meetings by Zoom in EDKY – Procedures
- The Impact of the CARES Act on Chapter 13 Cases
- “I Can’t Make My Plan Payments Right Now”: These Policy and Procedure Changes Might Help
- Secured Claims in a Chapter 13 Plan in the EDKY
- New Deadlines for Filing Tax Returns as Required by Section 1308
- Late Secured Claim Disallowed Under 12/01/2017 Amended Rules
- Increases in Prime Rate of Interest and in EDKY Trustee’s Fee
- Delinquent Property Taxes and the EDKY Chapter 13 Plan
- Chapter 7 and Student Loans
- Bitcoin and Bankruptcy
- The New Chapter 13 Plan in Operation: The Good, The Bad, and The Ugly
- Prime Rate; Bar Dates; & Other New Plan-Related Topics
-
Links
-
Archives
- April 2020 (1)
- March 2020 (2)
- March 2019 (1)
- January 2019 (1)
- November 2018 (1)
- October 2018 (1)
- May 2018 (1)
- January 2018 (3)
- December 2017 (2)
- November 2017 (1)
- September 2017 (2)
- July 2017 (1)
-
Categories
- Adoption
- Alternate Debt Relief
- attorney fees
- Bankruptcy
- Assets
- Automatic Stay
- Business debt
- Cash Advances
- Chapter 11
- Chapter 13
- Chapter 7
- Conversion
- Credit Counseling & Debtor Education
- Debt solution centers
- Discharge
- Disposable Income / Budget
- Exemptions
- Foreclosure
- Fraud
- Home Loan Modification
- Home loan modifications
- Means test
- Plan payments
- Planning
- Pre-filing planning
- Preference / Preferential payments
- Proof of Claim
- Property (exempt
- reaffirm or surrender)
- Redeem / Redemption
- Security interests
- Student loans
- Tax Debts
- The estate
- Blogroll
- Business & small business
- child custody
- child support
- Civil Procedure
- consumer bankruptcy
- consumer debt
- Debt collection
- dissipation of assets
- Divorce
- Estate Planning
- Family Law
- Financing
- Fraud
- Gratitude
- Guardianship
- Life & Law
- Marital Assets
- Mediation
- Negotaion & conflict resolution
- Parenting
- Paternity
- Politics
- property allocation
- Solo & Small Firm
- Spirituality
- Uncategorized
- Visitation/Time sharing
- Words & Phrases
-
RSS
Entries RSS
Comments RSS
Me and my wife just filed a uncontested devorce her in fairfax virginia..I have found out that I have found out that I have to give half of my retirement savings that I get from my employer to my futere ex-wife, I s this true? can I avoid that to happend? please help me ..thanks