Do We Need a QDRO?

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If your spouse has a retirement plan or pension and you are entitled to share in the distributions, you absolutely need a Qualified Domestic Relations Order (QDRO). In fact, a plan’s administrator is not permitted to distribute funds to anyone but the participant without a QDRO.

A Domestic Relations Order (DRO) is an order or judgment issued by a court directing or approving the distribution of all or part of a participant’s retirement plan to another payee. This payee can be an ex-spouse or a dependent. According to the IRS, an adult payee would also be required to cover part of the cost of the plan, while a minor would not. (The calculation is here.)

An order is considered “qualified” only after it has been approved by the plan’s administrator–i.e., it fulfills the particular plan’s criteria and procedures. A DRO judgment is generally submitted directly to the plan to be officially qualified. Distributions to the payee are made tax-free and penalty-free, even if the participant is below the age of distribution, so that the participant is not disadvantaged by the roll-over or distribution.

The language of a QDRO is very specific, so it’s best to work with an experienced lawyer and/or actuary to draw it up. The need for a QDRO can be avoided, even if your spouse (or you) have retirement or pension plans, through the negotiation process. Some other asset or assets can be accepted by a spouse in exchange for any portion of the retirement account, for instance, maintaining full ownership of the family home rather than selling and splitting the profit. If you can come to an out-of-court property settlement that stipulates how much, if any, of the pension or retirement account will be split, you can avoid the judge dividing your retirement accounts for you, as he or she sees fit. If at all possible, come to an equitable agreement before the end of the divorce process in order to retain a degree of control.

The QDRO process can take time, so don’t wait. Ideally, it should be completed in time to submit along with the rest of the divorce settlement. If you begin the process late, or even after the divorce, and your spouse remarries or dies, you may not get any benefits.

Government and military pensions follow different laws and are not covered by the QDRO laws. They are more difficult to split than plans from private employers, in which case, it is even more imperative to get the help of a divorce law expert.


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Student Loans and Your Divorce

Given the high cost of higher education, student loans carried by either or both spouses can weigh heavily on financial decisions and life choices. Often it can delay the purchase of a house or starting a family. This can cause a great deal of stress. It’s not surprising that 13% of divorced people say student loans were the major cause of their divorce.

But who pays the loans after you split? There’s no easy answer to this question. You might think that the spouse who got the loan pays for the loan, but there are many factors.

  • Was the loan incurred before or after marriage?  Here in Pennsylvania, loans acquired during a marriage will be considered marital property.
  • Did the other spouse supply support, such as delaying education, taking over additional responsibilities, or taking another job while the incurring spouse was in school?
  • Did the supporting spouse help pay down the debt already?
  • Was a degree earned?
  • How long were you married after the degree?
  • Did the degree lead to a lucrative career from which both parties benefited?
  • How well can the other spouse support himself or herself without the incurring spouse’s income?

The determination of whether the loans are considered separate property or marital property is the most fundamental factor, before other considerations are made. In a community property state, marital property, including debt, is split 50/50. In an equitable distribution state, the factors listed have much more weight when determining the distribution of the debt.

If the loan was incurred before marriage, it is considered separate property – generally. But if the degree was subsequently incurred once married and both spouses benefited from the degree, the loan may be considered to have been incurred in order to attain marital property, and therefore it will be considered marital debt. If a degree was not earned or no benefit came from the degree, it would likely remain separate property. The spouse who incurred the debt would be solely responsible for it.

In some situations, the support provided by the other spouse may actually be considered a loan in kind, which could offset the supporting spouse’s portion of the incurring spouse’s loan debt.  It is important to note, when we work with you on equitable distribution of assets and debts, the loan may still fall primarily on the party who attended school.

The best approach when dealing with these muddy waters is to enlist the help of a lawyer with expertise in the area of student loan debt. The lawyer will be able to give you the likely scenarios for your particular situation and come up with a presentation of facts that will best benefit you. Talk to us to see what we can do for you.

 


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Can Any Part of a Divorce Decree Be Reversed?

A divorce decree is a court order that is final and legally binding on both parties. Besides declaring the marriage legally over, it decides division of property, custody, and support.

Reversing any part of the decision requires an appeal to a higher court here in Bucks and Montgomery Counties. In the case of both parties reconciling and wanting to reverse their divorce entirely, several states will allow reversal, if within a certain timeframe; but for most states, even when the request is mutual, the divorce decree cannot be reversed.

Appealing aspects of the ruling

You can appeal certain decisions of the court, such as support and alimony, child custody, and division of property. However, it cannot be on the basis that you think the judgment is “unfair.” There must be compelling legal reasons.

Choose a lawyer who is experienced in appealing family law cases. Not all lawyers have this experience. Sit down with your lawyer and discuss your options. Legal errors or evidentiary errors are the most successful bases when appealing a ruling. Your lawyer should comb the decision for any errors that might have occurred and explain to you the errors and the standard of review that applies.

Factual errors have to be significant and very well documented to bring about a successful appeal. Division of property is rarely overturned unless clear evidence of fraud or hiding of assets is uncovered.

Modification of the ruling

Life situations change. Sometimes they change so much that the conditions of the divorce should be adjusted, at which point you would file a “motion to modify,” generally in the same court where the original decree was handed down.

Modification of child support:  Major changes in the financial position of the parent or the needs of the child could justify a modification. Examples include the parent getting laid off or the child incurring extensive medical bills.

Modification of spousal support: Spousal support can be modified with regard to the amount or duration of support when there have been significant changes in circumstances for either former spouse. One cannot demand more money simply because the paying spouse has suddenly hit the lottery.  In rare cases an alimony agreement is non-modifiable.

Modification of child custody: A modification can be ordered if the judge determines it is in the best interests of the child. Situations might include the custodial parent’s arrest, strong concerns about neglect or abuse, or a deterioration of living conditions.

Appeals and motions to modify can be legally complicated and emotionally draining. We are experienced in these areas and can guide you through them. Contact us today so we can discuss how we can help you.


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Divorcing a Narcissist: What to Expect, What to Do

Not every jerk is a narcissist. A true narcissist has low empathy, assumes superiority, craves power and control, and wants to win at all costs. Men outnumber women 2:1 in true narcissism, so for ease of reading, I will assume the husband is the narcissist. But this advice is equally important for a husband dealing with a narcissistic wife.

What to expect in your divorce

In short, expect it to be long, hard, and ugly. This probably won’t surprise you, considering what you lived with.

Your narcissist will try to drag it out as long as possible, filing motions, not showing up, missing deadlines. He will refuse to settle and refuse to negotiate. He wants to be in control, wants to win, and wants to see you lose. It doesn’t matter how much it costs him, and if it costs you, too, that’s a win for him and a loss for you.

He will paint you black, even if he has to lie about it. He has little or no concept of the emotional harm he’s doing, even to his children. He thinks he’s right, thinks he’s superior, and probably thinks he’s the victim and everyone should feel sorry for him. And narcissists can be charming (which is probably how he fooled you in the first place) and will, at least at first, probably fool the judge.

If there are children involved, this behavior will sadly overflow into his relationship with them. He will not share his schedule, will make commitments for them without telling you that will cause you inconvenience or embarrassment, and will probably talk badly about you to them and their friends.

What you can do to survive and “win”

First, you need to stay emotionally healthy through this. Seek the emotional support you need. You may already be experiencing the effects of living with such a spouse for so long. You will probably benefit from a therapist experienced in dealing with these kinds of situations. Your children might also need someone to talk to. Strengthen your circle of friends and family who see your spouse clearly and support you emotionally.

Second, find a good lawyer who clearly understands these situations and how to counter the tactics of a narcissist. Any old lawyer won’t do. You need experienced help.

Record everything! Your lawyer will advise you as to the kinds of records you need to carefully keep, but start chronicling your conversations and interactions with your spouse as well as your day-to-day activities. You will need them when he makes wild accusations against you.

Stay calm and take the high road. Though you’re likely to fall into his trap once or twice and lose your cool, each time you explode in anger or tears, you play into the scenario he’s painted of you. Your pain won’t be able to be hidden, and that’s good and appropriate. But remain honest and calm in your court dealings.  Your narcissistic spouse is not rational and will not listen to rational arguments, so speak only to your lawyer or the judge about the false accusations.

This also applies to your interactions with your children. You may have to correct any false things your spouse or ex-spouse says about you, but avoid accusations or negative talk about their other parent. It may take time, but eventually they will see through the lies.

Even if your spouse is not a full-blown narcissist, some of these problems may arise and the advice remains. Take the high road, develop emotional strength, record everything, and get a good lawyer.

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Starting a Divorce

The first step in pursuing a divorce is to have a Complaint filed with your local court. The Complaint would include the grounds under which you are seeking divorce as well as any other types of relief requested. For example, your complaint may also include counts for equitable distribution if there is marital property, custody if there are minor children involved, and support for minor children or between spouses. There is a filing fee due at the time the complaint is filed. The amount of the filing fee varies by county. Once a divorce complaint the court will assign a case number. This case number is to be used on all future filings regarding the case.

After filing a complaint, the next step is service. Pennsylvania Rule of Civil Procedure 1930.4 discusses acceptable methods of service for all domestic relations matters. The opposing party also has the option to sign an Acceptance of Service form. This is a viable option if the divorce is amicable. The complaint can be served by personal service. If the complaint is being served personally, the person effectuating service should complete an affidavit of service indicating when and where the opposing party was served. Personal service can be carried out by any adult that is not a party to the action. The Sheriff can be contacted to effectuate personal service for a fee. There are also numerous private companies that will effectuate service for a fee. Finally, a complaint may be served via mail; specifically, certified mail, return receipt requested, restricted delivery. Service in a divorce matter must be accomplished within 30 days of when the complaint was filed where the Defendant is within the Commonwealth.

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How to Help Your Divorce Lawyer Help You

Our goal is to help your divorce proceed with the least amount of stress and difficulty. We know our business, but regarding your particular case, we only know what you tell us. There are things you can do to help everything run smoothly.

So, how can you make your divorce easy?  

First: We need to know your goals as well as certain personal information. What are you hoping to gain from the divorce? Full custody? Child support? Spousal Support? The business? Certain property items? A clear wishlist at the beginning will help us strategize.

Do you or your spouse have any medical issues, either mental or physical? Are you both U.S. citizens, or could divorce affect legal status in the country? Do you have any pre- or post-nuptial agreements or any lawsuits pending? These details and issues might affect settlement.

Second: Timeliness is crucial. Please be sure to provide us with the necessary documents or answers to questions we may ask as quickly as possible so that we can keep your case moving forward.  Sometimes our schedule will be set to keep your process moving forward while other times the courts have a set calendar we must follow.

Third: Keep in touch. There will be periods of lull in the proceedings; we will reach out to you to keep you informed or request further information, but check in regularly if you would like a real-time update.

Fourth: Provide documentation. We will provide a list of documents that we need from you, but if you come to your first appointment equipped with some documentation, things may go much more smoothly. Here is a summary of the kinds of items we will need:

 

  • Statements from banks and other financial institutions
  • Tax returns and supporting documents
  • Bills, loans, mortgages
  • Insurance policies
  • Wills or living wills
  • Titles on property owned
  • Financial information about any businesses owned
  • List of property owned singly or jointly, including jewelry, furniture, and other items, with listed value
  • Any correspondence you think is pertinent: letters, emails, texts, or social media posts

In summary, help us help you by providing documents or answers that we need, meeting deadlines, and keeping in touch.

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5 Reasons to Avoid Going to Divorce Court

The familiar phrase “ugly divorce” usually refers to those that have gone to divorce court because they could not or would not agree on specific items (or anything!). There are some situations in which divorce court is the only option, but it should be avoided if possible. Afterall, a judge will be making decisions about your life, financial situation and how you spend time with your children.  Court should be a last resort, because of the serious negative aspects of this particular means of settling marital dissolution.

  1. Divorce Court creates a very combative atmosphere. Before going to court, lawyers may try to work together to find an equitable settlement, but in court, their job is to “win” for their clients. Tactics may be more aggressive because the lawyers need to place a very strong argument before the judge, and may include the “airing of dirty laundry.” The public disclosure of private family matters is something you might prefer to keep private.
  2. Divorce Court creates intense stress and hurt feelings, further damaging the relationship of the spouses, which inevitably hurts any children involved. All this pain decreases the future possibility of cooperation between the spouses, which also hurts children.
  3. Divorce Court can be long and drawn out. The judge is a very busy person and your court dates need to be fit into his or her schedule. Long periods of lull followed by intense and stressful court proceedings will be the norm.
  4. Divorce Court is expensive. Besides court fees, going to court takes more time and more work for the attorney than other methods.
  5. Divorce Court is risky! You may think you will get “justice” but unfortunately, that may be less likely in court than in one of the alternative methods. This is because judges do not always agree with your version of fair.  Certainly they try to be fair and impartial but, they don’t know you, your spouse, or your children. They don’t have time to hear every stitch of evidence. You don’t get an opportunity to talk to the judge directly; you’re dependent upon your lawyer. Then this judge, who doesn’t know you, hasn’t talked to you, hasn’t walked with you through this process, only knows what the lawyers have said about you and what evidence has been presented about you, will make a binding decision on everything that matters the most to you: your children, your assets, your very future. This is incredible power in the hands of one person.

Generally, unless one spouse is particularly combative, has a history of abusive behavior or substance abuse, or is suspected of hiding significant assets, divorce court is not the best option and should be avoided.

Mediation or collaborative divorce processes are methods that are less stressful and often less expensive. A litigated divorce, which essentially means a lawsuit, is often necessary, since in 80% of cases only one party desires the divorce. Nonetheless, litigated divorces don’t need to go to court, and every effort should be made to prevent that step.

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Discovery in Divorce

Discovery is the process of obtaining information from the opposing party in the course of a lawsuit. Discovery is governed by the Pennsylvania Rules of Civil Procedure (Pa. R.C.P.). Discovery is allowed in alimony and equitable distribution without leave of court. The information requested must be relevant to the case pursuant to Pa. R.C.P. 4003.1. In divorce, the court gives much leeway as to what is relevant since the factors for equitable distribution allow for broadness.

Formal discovery methods must adhere to the Rules of Civil Procedure and the acceptable methods include interrogatories, depositions, production requests, subpoenas to produce documents, and request for admission. Interrogatories and production request are the most frequent methods of discovery in divorce cases. Interrogatories are a written set of questions for the other party to answer. A production request lists all the documents a party is seeking. Subpoenas are utilized as well when it is necessary to get information directly from the source in the instance a party does not have it or will not cooperate in turning it over. Authorizations can be acquired in lieu of a subpoena if a party has not produced the documents themselves but is willing to cooperate in signing the authorization for the opposing party to do the legwork in obtaining the documentation.

Due to the expense to the parties for discovery, lawyers will sometimes agree to exchange discovery informally. This generally involves the lawyers deciding what information is relevant and then gathering that information and sending it to the other side in exchange for receiving documentation that they need from the other side that is also relevant.

Rule 1930.5 states that there shall be no discovery in a simple support, custody or Protection from Abuse proceeding unless authorized by court.

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Spending Money While Going Through a Divorce

Part of the divorce settlement process includes determining how to divide marital assets equitably. Equitably does not always mean equally, and factors in that calculation may differ from state to state. However, one thing that divorcing spouses need to avoid is the dissipation of marital assets.

Dissipation is the legal term for using funds in an extraordinary or unnecessary manner – in other words, wasting money. Such expenditures can be deemed as retaliatory, or an effort to decrease the spouse’s portion of the assets, and can result in penalties.

While going through the divorce procedure, avoid major expenses that are not typical, for instance purchasing a luxury automobile or going on vacation. Even frequent smaller purchases could be considered dissipation if the accumulated expenditure becomes substantial. Avoid the sale of assets: a boat, jewelry, etc. Even if you think it is “yours,” in the judgment of the court, all assets acquired during the marriage are deemed joint assets and will be calculated into the total sum of marital assets.

When a spouse brings a complaint of dissipation and the court judges in his or her favor, the judge generally will award that asset to the spouse who spent it and give the other spouse a financial award in the same amount. For instance, if you spent $20,000 on a luxurious vacation, the judge will determine that you have spent $20,000 of your assets already and your spouse may get $20,000 more than you do at the division of assets.

But what if you suspect your spouse to be the one wasting money? It can be difficult to prove if you do not have access to all financial records during the divorce. Major purchases or expenditures may be easier to identify, but for frequent extravagant expenses, gambling losses, or other wasteful spending, you may have to engage a forensic accountant to analyze the expenditures in order to determine if they are substantial and frivolous.

 

Prior to a divorce, a person may be tempted to hide money. If most of the money is in your spouse’s name, it is a wise idea to move some funds into an account in your name so that you have money available in the short term. However, do not hide it. Money can be traced, and the court may further penalize you for perceived ill will. And under some circumstances, a spouse can demonstrate dissipation started before the divorce was filed, so spend carefully if you suspect a divorce is imminent.

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Divorce and Your Retirement

As a family lawyer for Bucks and Montgomery County, we help clients just like you through the complicated process of divorce. When clients walk in our door, they are usually very concerned about paying and receiving alimony and child support and then working out a schedule for their children.  During the initial meetings and discussions, we remind them of the importance of looking down the road a few years to retirement.

 

Divorce is as much about your future as it is about your past and present. And retirement funds and benefits are a critical component of your financial future. Whether you are trying to protect your retirement accounts, or collect from your spouse’s retirement accounts, dealing with these funds is as important as it is complex.

 

For many people, retirement accounts and benefits are one of their most valuable assets. In a divorce, these funds are considered marital property and are subject to division. Retirement funds can include 401k money, investment funds, IRAs, and pensions.  Social Security is a benefit and not an asset that is distributed in a divorce but may be considered income for purposes of support. With short and long-term implications for both parties, it is essential to understand the laws and your rights when it comes to divorce and retirement funds. Here are a few points to keep in mind.

 

Understand how retirement funds are divided

An ex-spouse is entitled to a percentage of the amount of retirement earned during the marriage.  If a spouse has been working for 20 years, and the marriage lasted for the last 12 of those years, the ex-spouse is only entitled to retirement funds deposited and interest earned during those 12 years, not earnings or investment made prior to the marriage or after separation.  Also, since oftentimes the spouse is still working, it is unknown how many years of work they will have. A fraction, known as a coverture fraction, is a formula often used to determine what the percentage will be at retirement. The numerator is the number of years married and the denominator is the total number of years accumulated in the plan (usually TBD).  The percentage the court awards is multiplied by the fraction and the amount of the plan or the dollar benefit to determine what the spouse, called the “Alternate Payee” will receive. It is also important to determine if there are any beneficiary options and whether the spouse will be a beneficiary and whether it has marital value.

 

How are your retirement funds divided after divorce?  

If your or your spouse’s 401(k) or employer-sponsored retirement accounts will be divided, you need to let the plan administrator know as soon as possible. They will be able to tell you the value of the retirement account on the date of marriage and the value upon divorce – again, this is the part of the retirement account subject to division.  

 

If you are going to be dividing retirement assets, in many cases, you will need to obtain a Qualified Domestic Relations Order (QDRO), which is separate from your divorce decree. It will be signed by a judge and will instruct the employer to separate the retirement account into two accounts. This order will allow retirement funds to be withdrawn from the retirement account without penalty and deposited into a separate account for the non-employee. It is important to note that QDROs are not needed when the retirement plan is an IRA and in other types of plans will be a DRO similar to a QDRO.  It is best to hire an expert to draft a QDRO who is familiar with the rules and regulations and plans involved. The cost to draft it is typically around $600 per QDRO and the parties normally share that cost. You may want to check if your plan, however, imposes any of their own fees.

 

Consider Alternatives

In some situations, the parties may negotiate a settlement that avoids the splitting of retirement funds. For example, one spouse may offer the other a buy-out such as stocks, bonds, investments, or property of equitable value in exchange for keeping all of their retirement funds intact. In order to do this, however, you must know the dollar value of the marital portion of the retirement plan. In pensions, this will require an appraisal.  In 401(k) plans you will need all the statements after separation as well the statement at the time of separation in order to determine what is marital.

 

Get Professional Help

A qualified attorney will know your rights in regard to protecting or collecting retirement benefits and funds. A certified accountant can help you explore the short-term tax implications and long-term financial ramifications of dividing retirement funds.

 

Divorce presents an incredible challenge – making decisions that have far-reaching impacts at a time when you are the most emotionally and mentally stressed. Allowing a compassionate professional to provide guidance can help ensure not only a brighter future but a more financially secure one as well.

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