People file their own divorce because they can’t afford to hire an attorney, or they agree with their spouse about all divorce issues and can file a relatively simple uncontested divorce. One of the most popular ways to file your own divorce is with a online divorce provider. An online divorce requires completion of questionnaires that provide the information required in the jurisdiction for the completion of the paperwork required for filing. Some online companies mail the divorce paperwork back; others return it instantly online. It is then the petitioner’s responsibility to file the paperwork in his or her local court. Doing a divorce online generally costs around $300 plus court fees.
In a pro se divorce, the petitioner, or plaintiff, follows the same procedures as any practitioners and completes and files all the legal forms. The pro se filer must be careful to do everything the practitioner does – including taking care of the pension. A good online divorce solution will address the pensions or retirement accounts, but they do not prepare the QDRO.
After real estate, retirement plans are usually the largest asset in a marriage. In general, retirement assets earned during a marriage are marital property in the same way a house and a savings account are. This includes pension benefits earned during a marriage; retirement savings accounts funded during a marriage; and the earnings on these accounts that accumulated during the marriage.
Yet, amazingly, divorcing spouses often overlook pensions and retirement plans during divorce because a divorce happens years before retirement. When retirement lies down the road, couples may neglect to pay the necessary attention to pensions and retirement plans when they decide to split up. Practitioners often hear the lamentations of people who remember retirement plans only after their divorces are finalized. As a result, a former spouse can lose out on a significant portion of the marital assets.
A pension plan is a tax deferred savings plan. Typically, during years of employment, monetary contributions are made by the employee and/or by the employer to a retirement plan. The contributions and the earnings generated accumulate tax free, until retirement. Upon retirement, the employee receives a specific monthly income for life or a lump sum payment. There are two general types of retirement plans: the Defined Benefit Plan and Defined Contribution Plan. Pension and retirement benefits earned during a couple’s marriage are of great value. Divorcing couples married for a long time often build up significant marital assets in defined benefit pension or defined contribution plans.
The division of retirement benefits in a divorce requires a QDRO – a Qualified Domestic Relations Order. A QDRO is a legal order included in a divorce agreement that allows a divorced spouse to receive all or a portion of a qualified retirement plan from a former spouse. The employee whose interest is being transferred is the participant; the individual receiving the interest is the alternate payee.
A signed agreement does not in itself make it a domestic relations order. The order becomes qualified when it is reviewed and approved by the employer’s plan administrator in the form of a QDRO. Until this happens it is just an order and cannot be legally enforced as part of the final judgment or decree. Until a signed court order (QDRO) has been approved and processed by the plan administrator the benefits of the alternate payee are not protected.
The QDRO should be prepared simultaneously with the divorce because many plan administrators may take a considerable amount of time to review a draft QDRO. Moreover, processing by the courts may take time. The division of a pension should not be ignored or postponed. Even competent lawyers may be tempted to ignore QDRO issues. A highly competent and well-respected attorney once said, “I don’t want to deal with QDRO issues — it’s too much liability. I tell my clients that they need to hire the QDRO expert on their own after the divorce is over.” This is a dangerous attitude for attorneys to take.