By Karen Friedman
Valentine’s Day is for love.
Except when it isn’t.
What happens when love fades, the marriage crumbles, and you end up getting a divorce?
Well, one piece of important advice for the broken-hearted on this Valentine’s Day is to take care of yourself financially. This is particularly important when it comes to retirement benefits.
It may not be the most romantic advice but it sure is necessary!
Tip one: Know that retirement benefits can be a couple’s most valuable asset, sometimes worth more than a home. You should make sure that you get your fair share. This could make the difference between being financially insecure in your later years and having a decent standard of living.
Tip two: When you are dividing up marital assets, make sure the divorce decree clearly lays out whether and how retirement benefits earned during the marriage will be divided. Also, make sure that the decree addresses whether benefits will be paid after your ex-spouse dies. Do this before the divorce is finalized because it’s almost impossible to make changes later!
Tip three: The divorce decree is not enough. Once you get a divorce decree that spells out that retirement benefits are to be split, you will generally need a separate legal order called a Domestic Relations Order or DRO. This is a detailed legal document that must be submitted to retirement plans before they can pay you a share of your ex-spouse’s benefits. Once a company or union retirement plan has approved the DRO, it is called a QDRO or Qualified Domestic Relations Order. Government plans have other names for the document they approve.
The Pension Rights Center and pension counseling projects around the country hear from hundreds of people each year who did not know that they need a QDRO or other approved court order to receive a court-awarded share of their ex-spouse’s retirement benefits. We also hear from people who know they need a QDRO but have been unable to find someone to draft the precise legal document that retirement plans require before they can pay benefits to an ex-spouse.
For these reasons, the Pension Rights Center has launched an Initiative on Women and Retirement at Divorce to make sure that people know that they need a QDRO and to make the process of getting a QDRO more efficient and less costly. We have brought stakeholders from all sides – retiree organizations, women’s groups, pension plans, employers, financial institutions, family attorneys and judges – together to develop recommendations for making the QDRO process easier for consumers – and less burdensome for retirement plans.
We are now starting the process of implementing these recommendations.
The first recommendation is to develop strategies to educate people about QDROs and how they work.
So, on this Valentine’s Day please pass along this blog post to others. Also, we will be posting new information on our website.
So, if you’re not getting roses for Valentine’s Day, think about getting a QDRO! Empowering yourself to protect your future retirement security can be romantic!
Check out our fact sheet for other tips.
To find help drafting a QDRO contact a state or local bar association referral service or the National Pension Lawyers Network, a service of the Pension Rights Center that connects people in need of legal assistance with local attorneys who can assist them. Also, some courts, court-related self-help clinics, and legal services offices can help individuals who are representing themselves in divorce proceedings.