Splitting up marital property is often the most challenging aspect of divorce. Frequently, spouses don’t agree on all of the details. They may also need to take special steps to appropriately resolve matters related to specific assets.
If they own a home together, the spouse staying in the home may need to refinance, while the other spouse likely has to sign a deed. If the spouses have set money aside for retirement, they frequently need to plan carefully to avoid taxes and penalties. A qualified domestic relations order (QDRO) helps spouses appropriately address tax-deferred retirement savings and pensions.
Each spouse can receive a portion of the original account balance in accordance with an agreement between the spouses or a judge’s property division ruling. Before they can divide the funds, an attorney has to draft the QDRO. The right people have to approve the QDRO as well. Whose review is necessary to properly utilize a QDRO?
Both spouses
Typically, one spouse has their lawyer draft the QDRO based on the final property division decree. Both spouses have to review the document and sign it. In high-conflict scenarios, this stage can lead to delays. Ideally, both spouses want to complete the property division process as quickly as possible and cooperate by signing once they affirm that the document’s information is correct.
A family court judge
Typically, the judge who oversaw divorce litigation or approved the terms of an uncontested divorce also needs to review the QDRO. Their review of the document helps ensure that it actually aligns with the terms established in the initial property division decree.
The professional splitting the account
Retirement savings accounts are typically under the control of a financial professional. That professional receives the signed QDRO and must ensure that it is appropriate. They then split the funds and deposit a specific percentage of the original balance into a new account that is in the name of the other spouse. By requiring the review and approval of two professionals, the state helps prevent scenarios in which someone intentionally manipulates the process for personal benefit.
Spouses may need help drafting a QDRO or following the right procedures to actually divide their retirement savings accounts, and that’s okay. Retaining the services of an attorney familiar with QDROs can be critical for those who want to avoid penalties when splitting retirement savings.