qdros
QDRO
Early in the 90s Mr. Reiss emerged as the number 1 expert doing QDRO's (See testimonials in this website). He no longer offers drafter services except for clients that retain him in significant other ways because most divisions have problems because required valuations were not done while the parties were married and he will not encourage problematic divisions.
These days he is kept busy testifying why previous QDROs do not comply with the Final Judgment and these errors are serious enough to warrant litigation and he seldom fails in court. Instead he offers QDRO review services because so many divisions are problematic. Oftentimes, valuation issues were bifurcated and left for another day (see Warning on right) and are at the heart of a 50% marital division. What makes matters so much worse are the following:
1) So many drafter ignored the court order and either draft them to serve the side that paid or draft them to what they thought the order should have been instead of what the court ordered or a division to which the parties agreed.
2) A well known young lawyer who drafts QDRO's brags that he alone decides how the order should have been rather than how it actually reads and he decides issues that only a court should decide. Today he is not alone and more are doing just that. They do not openly admits it, like he does, but instead lie to you and tell you the law requires your signature before it can be entered. There is no federal or state law that requires. When both parties sign they executed an amendment to the final judgment preventing the correct amount be determined by a court, which absent the execution allow its substitution with a new QDRO correcting that amount.
3. Prior elections were not factored in which may represent marital or non-marital property but go to the other spouse, because they could have or should have been valued before divided. Whether it can be done post-judgment depends on a variety of factors, including the specific language the court or parties used in the division. Other matters, like failure to tax-affect, is fatal unless it was specifically reserved in the Final Judgment.
Warning: QDRO MATH
Most benefits are divided in the final judgment with generic language, such as 50% of the marital portion. When this occurs, the exact division was bifurcated, meaning that a valuation must be done or risk getting the wrong amount. This is something that should have been done before a final judgment was entered divorcing you. If you retain someone to draft your QDRO without this information it is extremely likely the amount that will be divided incorrect and it could be off by huge amounts.
If it's wrong by a huge amount and nothing was done to amend your judgment, it can be corrected at any time to conform to the final judgment. But you will need a new QDRO and likely court action to amend it. Most times these QDROS are drafted by QDRO lawyers who generally avoid valuation by getting you and your spouse to approve the QDRO by agreeing that it accurately represents the correct amounts awarded. This is a post-nuptial agreement permanently modifying your final judgment and is irreversible. This could save you a thousand dollars or a few thousand dollars in out of pocket cost but result in a 30% cost in benefit entitlement on what you were awarded or retained as the employee. Florida laws are very complex and your divorce lawyer put you in this position because she or he does not understand retirement benefits.
You should not take this lightly. Depending on the facts, the features of the exact retirement plan, this could hurt either the employee or non-employee spouse with irreversible errors of up to $600,000. There are dozens upon dozens of different fact patters creating likely errors, where which spouse is hurt depends on the specific facts. You can get a glimpse of the more frequent facts and impact by reading this article: QDRO Math.
General Information About QDRO's
All retirement benefit plans and many deferred compensation plans contain a non-assignment clause. Its purposes is to protect the benefits earned from attachment by creditors. A court awarding a spouse a percentage of these benefits has to deal with this non-assignment clause. They often overcome this problem by dividing the benefits with a QDRO or a QDRO-like order. The QDRO or QDRO-like mechanism used to divide the perk is based on federal or state laws that allow a family law court to award the benefit through an assignment. The state or federal law authorizing exceptions to the non-assignment clause limits them to spouses involved in matrimonial litigation. These enabling statute were first created in the Retirement Equity Act of 1984, 29 USC 1056(d)(3).
But even before this enabling law, earlier case law found that spouses were not creditors but were actually part of the protected group from garnishment.
There are special problems with dividing municipal plans (in Florida) because our case law erroneously interprets the non-assignment clause to interfere with division. Few states interpret the non-assignment clause to specifically bar spouses from a direct division of benefits making it even more important that valuations are done long before the property is divided.
Mr. Reiss wrote one of the earlier bar journal articles on the subject. Jerry Reiss & A. Matthew Miller, Drafting QDRO’s: A Malpractice Waiting to Happen, Parts I and II. Both parts are available at my LinkedIn profile where both are available to read.
