Equitable Property Division: Modifying QDROs and Life Insurance
When parties are faced with divorce, they often wonder who will receive which possessions, personal property, and the home. Less thought is given to the division of intangible assets, including employee pensions, and life insurance policies. If you are divorcing a spouse, it is important that you understand all your options, preserve copies of all tax and accounting records, and consult an attorney before making any concrete decisions. Eveland & Foster, LLC divorce attorneys can provide crucial advice to potential clients regarding equitable distribution of assets in a divorce.
What is a QDRO, Anyway?
A QDRO is an acronym for Qualified Domestic Relations Order. It is issued by the Employee Pension Plan Administrator. I.R.C. § 504 (2020). A QDRO is the only document that must be completed by the employer so that pension distributions can be made. If you are currently considering divorce or have already filed and do not have representation, and you or your spouse have an employer-sponsored pension plan or 401K, you should review your options with our lawyers. Only a court order can dictate how the plan participant(employee) will distribute plan assets with the non-participant (soon-to-be ex-spouse). QDROs only apply to 401K pension plans and some IRAs if the accounts are managed by the employer.
Modifications to Life Insurance Policies and Beneficiary Plans
Life insurance distribution and beneficiary plans also require review during divorce proceedings. Usually, the spouse is the de facto beneficiary when a life insurance policy is paid. If you want to change the beneficiary distribution or remove your ex-spouse as a beneficiary entirely, you should discuss it with our attorneys during your family law case consultation. If you and your spouse share children together, whether or not the policy is term life or whole life insurance, making necessary adjustments is critical for their financial protection. Prior to divorce hearings, both beneficiary and policy ownership documents require modification to remain effective.
In New Jersey, a family law judge can make life insurance benefits determinations unilaterally. If it is not explicitly clear in your marital settlement agreement that the parties have reached a compromise regarding beneficiary clauses, the judge will make a decision in the best interest of the child(ren). Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, 129 S. Ct. 865 (2009). It is critical that you discuss changes you want to make with your attorney prior to calling your life insurance adjuster. The lawyers at Eveland & Foster, LLC can provide pertinent advice on these matters. Making changes without prior written consent or a divorce judgment can jeopardize your case and the marital settlement agreement you will draft or have drafted between the parties.
Schedule a Consultation Today
At Eveland & Foster, LLC., our attorneys work with divorce and family law clients during tumultuous times in their lives. Our attorneys are well-versed in all areas of family law including real property, personal property, and financial property distribution. Divorce can be messy and combative. it requires level-headed, strategic thinking, and decision making for a party’s needs and desires to be effectuated. Parties must consider all options, including distribution of intangible financial assets like pension plans and life insurance policies, when they are seeking counsel or drafting a marital settlement agreement. Contact our attorneys today for a consultation to learn about your potential options.