One of the more challenging aspects associated with divorce is the property division process. This is particularly true in high-asset cases. While most couples worry about what will happen with their marital home and vacation properties, they often don’t consider what will become of their retirement accounts.
In some cases, each party has their own retirement accounts, and they each simply keep their own ones. There are some divorces in which a couple must divide a retirement account. There are special considerations that you will need to make in a situation like this. You may need to draft a qualified domestic relations order to effectuate the splitting of that account.
What is a qualified domestic relations order?
In the simplest terms, the qualified domestic relations order (QDRO) is a document that the court sends to the retirement plan administrator that outlines the splitting of the account.
It’s important to note that the QDRO must be specific. The plan administrator can kick it back to the court if there’s anything amiss with it. One example of this might be if it demands disbursement of options or benefits not covered by the plan. Because of this, it’s best to have everything checked carefully. If everything is in order with the QDRO, the administrator will follow the court’s instructions.
Is a QDRO necessary in your case?
Know that there are many tax-savings benefits associated with drafting a QDRO in your case. A QDRO isn’t necessary in every divorce. You’ll want to discuss the unique circumstances surrounding your case to determine if it is in your situation.
The property division process is all about balance, so think carefully about how each asset will benefit you or cause you stress in the future. This may help you to decide what you’re going to fight for. Once you have the division terms set, be sure you get any special documentation, such as the QDRO, you need.