The Basics of Qualified Domestic Relations Orders

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May 13, 2012 /24-7PressRelease/ -- A legal document known as a Qualified Domestic Relations Order (QDRO) is a way to apportion all or a part of one person's pension or retirement benefits to another during a family law proceeding. QDROs are most often used for:
- Division of pension and retirement accounts that are marital assets as part of a separation or divorce
- Payment of spousal support (alimony) to a former spouse
- Payment of child support

Not all domestic relations orders are "qualified" orders as required by state and federal laws, specifically the Employee Retirement Income Security Act (ERISA), that would grant the administrators of a retirement or pension plan the ability to disperse funds from one person's account to a spouse, former spouse, child or other dependent.

To be considered a "Qualified Domestic Relations Order" pursuant to ERISA, an order must include:
- The name of the retirement or pension plan
- The full legal name and last known mailing address of the plan's owner
- The name and postal address of the person to whom payments would be made from the plan (usually a spouse, former spouse, child or other dependent family member or a designated trustee or agent of a spouse, former spouse, child or other dependent family member)
- The amount of money to be transferred
- The way in which funds will be transferred (whether in a lump sum payment or a series of smaller payments)
- The "life span" of the QDRO (the date upon which payments will begin to be transferred and the date upon which payments to an alternate beneficiary will stop)

If any of the preceding elements is not included in the QDRO, it will not be qualified under ERISA. Individual pension and retirement plans might also contain additional restrictions that must be followed by the plan's administrator in order to properly handle a QDRO.

How Is a QDRO Drafted?

Plan participants whose benefits might be subject to a QDRO or an alternate payee/beneficiary seeking payments have the authority to draft a QDRO that would be enforceable subject to court approval. The process of drafting a valid QDRO that meets the criteria set forth by ERISA is an exacting one; most people who are interested in the creation of a QDRO work with a skilled financial expert or legal advisor. Working with an experienced professional is the best way to streamline the process and increase the chances of having the order be effective and enforceable the first time around.

Once the QDRO has been drafted, it is sent to the relevant state authority -- usually a family court -- for approval. After the court has signed off on the document and filed it, the order is enforceable. A QDRO can be part of the larger divorce proceeding or it can be filed independently prior to or following a dissolution of marriage. Regardless of when the QDRO is filed, though, it can be a vitally important part of any property settlement agreement and a good way to provide for the current and future needs of a spouse, former spouse, child or other dependent family member.

Article provided by The Law Offices of Wendy Raquel Hernandez, P.C.
Visit us at www.hernandezfirm.com

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