If you’re getting divorced, one document you should be aware of is a Qualified Domestic Relations Order (QDRO). This can be crucial when dividing assets, particularly retirement assets—such as a pension plan or an employer-sponsored retirement plan.
The challenge often arises when one spouse has been earning retirement benefits, and the other was counting on using them for retirement. Divorce—especially later in life—can disrupt these retirement plans. A QDRO divides the benefits so that, when the spouse earning them retires, a portion of those benefits will go to their ex.
Does this mean the ex gets half of the plan?
No, QDROs are tailored to the specific circumstances of the divorce, including the length of the marriage, the type of financial assets involved and how the rest of the property division is handled. This does not always result in an equal 50/50 split.
For example, imagine it takes 30 years at a company to fully earn a pension plan. If the couple was married for 15 of those years, the ex-spouse may only be entitled to half of the benefits earned during the marriage. In this case, that would amount to 25% of the total pension. The other benefits were earned outside of the marriage and are considered separate assets. Only marital assets are subject to property division.
Navigating complex and contentious issues
As you can imagine, this process can become very complex and sometimes contentious, as couples may disagree on how assets should be divided. If you and your spouse are in this situation, it’s vital to understand the legal steps you can take to protect your future.