We will give you language to use in the divorce decree that will make the actual QDRO drafting simpler and give you more protection, perhaps “winning the QDRO.” We will also strategize with you about options: how can you position the QDRO (or COAP or DFAS order) to your best advantage?
Nearly everyone just assumes a DRO is a “neutral” document that is written in technical language to divide an asset per the Court’s order. To some extent, it can be such a document, but there are many choices to make in drafting a DRO, including choices that may greatly benefit or harm you. If you treat a DRO as a neutral document, it will be neutral – but neutrality is not necessarily a synonym for “fair.” A neutral document may be deeply unfair to one side or the other. If you are contributing money to a Suvivor Benefit Annuity, for example, a neutral document that awards the SBA to your spouse without any corresponding contribution can cost you hundreds of thousands of dollars (or vice-versa).
Very few family lawyers (and almost 0% of judges) ever think about the fact that a QDRO is not a neutral document; it is an advocacy document. There are advantages you can take in the drafting of the document such that when the divorce decree (court-ordered or agreed upon) requires the pension to be “equally divided,” the actual document can include language to (among other things) determine:
- whether the nonmember spouse’s community property share terminates or continues after the member’s death;
- whether the nonmember spouse’s community property share should be applied to any pre-retirement death benefits or continue from any benefits payable to the member’s beneficiary(ies);
- whether the nonmember spouse’s community property share will revert to the member, or will be paid to the nonmember spouse’s designated beneficiary(ies); and/or
- whether the nonmember spouse’s community property share should be applied to any retired lump-sum death benefits.
When you are in the position of being the one to prepare the QDRO, 95% of the time the other party has no idea how to read it or has any idea of what it could even possibly say. By controlling what is in the language of the document, you control the answers to the items to be determined above. You may not be able to control whether or not you get more than 50% (or give up less than 50%), but you have a great deal of control over the other determinations. For example, if the nonmember spouse predeceases the member spouse, it is possible that the retirement benefits would revert to the member spouse. It is also possible that, if the member spouse predeceases the nonmember spouse, the nonmember spouse would get a lump sum payment of the death benefit.
In any event, the standard QDRO you get from an online source is a pretty good document. You pay $500 for that document (which you can also get from us for $500) and it’s a non-advocacy, neutral document that divides the retirement benefit. The drafting company may or may not (usually does not) have a lawyer in the office. This is further along than the majority of people in a divorce ever get. Just getting the benefit divided is a major step. And it is probably the best $500 you will have spent in your entire divorce. In my home jurisdiction, just filing for divorce costs $435.
However, you can do better than what you get for $500. It is also standard to have the parties split the cost of preparing the QDRO and jointly engaging the expert. That is fine, but when I advise my divorce clients, I always advise them to pay the entire QDRO cost upfront and engage the QDRO preparer directly and solely. Then the document can become their advocacy piece. After we have drafted the QDRO to your satisfaction (and benefit), you present it to your ex-spouse and ask them to reimburse you for one-half of the cost.
Engage us to draft an advocacy piece for you. It will be more than $500 (although not substantially more – we advise that you spend some time consulting with us for $500 per consultation and have the document drafted for $500). If the extra $500 per consultation buys you an insurance policy such that if your spouse predeceases you, you either get a lump-sum distribution of the balance of the death benefit from the plan or you get your spouse’s share of the pension benefits, this might be the absolute best deal in divorce law. You are basically buying a hundreds of thousands of dollars life insurance policy for a one-time payment of $500. Although we may not be able to get that agreement from your spouse, you will be armed with several different strategies to use the DRO to best position yourself in the event of your ex-spouse’s death.
I understand that hiring someone on the internet for around $1,000 is a bit of a strange proposition. Even then, for $1,000, I have to really manage my time or else I will not be able to give each case personalized attention. So, you hire me for $1,000 to draft an advocacy piece for you, without meeting me in person or possibly talking to me on the phone, and I am going to draft this insurance policy for you.
On the other hand, you do this when you buy car, boat, homeowners’ and term life insurance. Or you may have met someone (an agent or broker) who sells you the policy and answers some questions, but you spend much more than $1,000 on buying their policy and, if you are like most people, you barely understand even a small portion of it. Don’t even get me started on health insurance, where it’s safe to say that approximately 100% of people do not understand what they are buying.
What we do is provide a detailed intake sheet so that we can get certain information from you. I make myself available via email for all questions not answered by the Blog – and as I respond to emails from client, I add the question and my response to it to the Blog (confidentially of course) in order to grow the body of knowledge that can be shared by everyone. Then, we can book a call (normally 30-40 minutes – most QDRO questions do not take a full hour).
The other thing I do to put you at ease is the following: I guarantee that you get your QDRO advocacy document back within 7 business days or we give you the QDRO and your money back. Because pension plan administrators all take different amounts of time to analyze and approve a QDRO, the QDRO we send you within 7 days will not have “pre-approval” from the plan administrator because they pre-approve on a case-by-case basis. I am willing to give you the 7-day money back guarantee to ease your worry about spending $1,000 on a person you hire on the internet without meeting them, but really what you should be wanting is to have the document pre-approved, so that you can be certain the administrator has accepted it before you give it to your ex-spouse to review and sign and then give it to the Judge to make it an order.
To get pre-approval from the administrator, we charge another $100. This means that we send it to the Plan Administrator and follow up with them until the QDRO has been fully approved. Obviously, we cannot offer a 7-day guarantee on this service because most Plan Administrators typically take around 4 weeks to provide us with pre-approval.
There is another issue to consider, and I know this is getting long, but I want to give you everything I can upfront so that you have as much information as possible when you make your decision. I will provide you with options that increase your advantage. While the Plan Administrator is not supposed to do any review for content (or advocacy or advantage of one party or another), they sometimes do. The more (I prefer “assertive” to “aggressive”, but I will let you pick the term you prefer), the more likely the Plan Administrator will flag it and not approve it upfront. The great majority of the time, the Plan Administrator simply accepts our plans without question or comment, but there have been times when we must advocate for our position to make sure we have given you the best advantage possible. Thus, although you may find a $500 QDRO plan online (like you can find here as well), the real action is in developing an advocacy document that you can use to give yourself an advantage. We will draft the document to give you every advantage.
Back to the $500 QDRO for a moment. I feel like maybe you will think I’ve been trying to talk you out of it or that I am encouraging you to “pull a fast one” on your spouse. I am not. The $500 QDRO is meant to be a “neutral” document with a shared cost between ex-spouses who are working together. I will ask you, as part of the questionnaire about the issues raised above, and if you agree, I will put them in and if you do not, the document will be silent or default to whatever the Plan suggests as its language. There is nothing wrong with this – like I said above, you will be well ahead of most divorced couples. The advocacy document is just another way of doing it. Not better or worse from a moral standpoint, but better for you from a practical standpoint.
