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TX divorce lawyerWhen you are planning for a high asset divorce in Austin, Texas and know that your retirement accounts will be classified as community property and subject to division under Texas law, you will need to have a plan in place to divide those retirement benefits. For wealthy couples anticipating a high asset divorce, the amount of money in retirement accounts can be substantial. Using a Qualified Domestic Relations Order (QDRO) to transfer retirement benefits as part of your divorce could end up saving tens of thousands of dollars (or even more depending upon the amount of money in your retirement accounts and the amount that needs to be distributed to your spouse).

We want to tell you more about QDROs and how they work, and to provide you with examples that demonstrate the importance of having a QDRO in a high net worth divorce. An Austin high asset divorce lawyer is here to assist you.

What Is a Qualified Domestic Relations Order in a High Asset Divorce?

What is a QDRO? The Employees Retirement System of Texas (ERS) explains that a QDRO is a legal order subsequent to a divorce or legal separation that splits and changes ownership of a retirement plan to give the divorced spouse his or her share of the assets. In order to qualify for a QDRO, the ERS’ General Counsel must receive a certified copy of the divorce decree, and the ERS’ General Counsel must review and approve the QDRO.

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b2ap3_thumbnail_QDRO.jpgMany high asset divorces require the division of substantial retirement funds, which in Texas, usually involves the issuance of a Qualified Domestic Relations Order (QDRO). These orders, which are issued by a judge, essentially separate and transfer retirement plans between two parties. In fact, the issuance of a QDRO is often necessary before an employer’s pension plan administrator will even agree to divide a retirement account. QDROs contain valuable information, including how the account will be utilized going forward and how its contents will be divided. If you have retirement benefits that were at least partially accumulated during your marriage, you may need to divide those funds with your ex-spouse upon divorce. To learn more about this process, please contact an experienced high asset divorce attorney who can address your questions and concerns.

Dividing Retirement Funds

A party’s retirement funds are not always divisible upon divorce, as courts will usually only order equitable division if funds were accumulated during the marriage itself. Although it depends on the type of account, this means that the retirement funds will either pay out on a regular basis in the future or will be available for withdrawal at the parties’ discretion. It’s also important to note that the only funds that will be subject to division are those that accumulated during the marriage. Funds that accrued prior to the marriage will remain the sole property of the named participant.

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Texas high asset divorce, Texas complex litigation attorney, Williamson County high asset divorce lawyer, A prominent financial advisor suggests that spouses who receive the marital residence following a high-asset divorce sell it, downsize, and use the extra cash to make catch-up contributions to their retirement accounts.

Such action is particularly appropriate if the divorcee is over 50, because persons of this age have less time to make up lost wealth. If a person saves $500 per month in housing costs, invests it, and realizes a 5 percent return, that extra cash will be $77,000 in ten years. Professionals suggest that the funds go into a 401(k) or other employer-sponsored retirement account; in most cases, account holders can put up to $24,000 a year into their 401(k)s.

After divorce, household income drops by an average of 23 percent for men and over 40 percent for women.

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Texas high asset divorce attorney, divorce negotiations, Texas complex litigation lawyer, With the possible exception of the marital residence, a retirement account is typically the largest asset in a high net worth divorce. After years of saving and planning, it can be quite disconcerting to learn that a retirement nest egg is divisible just like any other marital asset. But, from both a legal and practical perspective, both spouses have made contributions to this account over the years, either by investing money in the plan or investing time in the marriage.

Most employer-sponsored plans, like a 401(k) or pension, require a Qualified Domestic Relations Order (QDRO); many IRAs can be divided without a QDRO. Many government-sponsored plans, most notably military retirement accounts, require a Division Order (DO), which is similar to a QDRO.

The Formula

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Austin high-asset divorce attorneyX collect alimonyX divorce decreeX high-asset divorce, high-asset divorce settlement, QDRO, QDRO collect back support, spousal support calculationsIt is a frustrating reality of divorce, but many ex-spouses do not honor the terms of their high-asset divorce settlement, especially when it comes to child support and/or spousal support. After what can be months, or even years, of drawn-out, complex litigation, the support checks the obligor spouse is supposed to pay stop coming, sometimes before the ink is even dry on the divorce decree.

Trying to collect back alimony or child support funds from an ex who refuses to pay often involves even more litigation and more legal expenses. However, one tool that many high-asset divorce attorneys are beginning to utilize in order to assure their clients receive the assets they are entitled to is the Qualified Domestic Relations Order (QDRO).

In a high-asset divorce, a QDRO is used to ensure one spouse receives the awarded portion of the other spouse's retirement funds. The QDRO is a legal document that lets pension managers and financial institutions know that there is an alternative payee to a particular account. This assures that the spouse who was awarded a portion of the funds will receive them in the future.

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