Another important thing to note about defined benefit plans is that a spouse can usually be awarded a “separate interest” or a “shared interest” in the other spouse’s pension. Some plans only allow a shared interest approach, some only allow a separate interest approach, and some offer a choice. It is imperative for your attorney to be aware of how the plan allows the pension to be divided because these different interests determine when the former spouse will be eligible to collect their portion, and what actions the employee may still be able to take to affect the former spouse’s portion of the award.
If a party is awarded an interest in the other party’s pension, a Qualified Domestic Relations Order (QDRO) will be necessary in order to instruct a company to implement the division. A QDRO is a separate court order that must be drafted, entered by the court, and submitted to the employer for implementation.
The QDRO requires additional language that is typically not included in the Final Judgment or the Settlement Agreement, and must address all aspects of the division. The QDRO should address the specific plan to which it applies, the components of the plan and how those are to be divided, what will happen if either party dies prior to or after receiving their portion of the plan, and the amount awarded. Sample QDROs can be provided upon request from most employers. However, we caution spouses that most models are drafted in favor of the employee, and there may be additional options available that are not included in the models. Your attorney should be aware of all options before negotiating a settlement or starting a trial in order to avoid a further contest later, when the parties believe the divorce is “settled.” In our firm’s opinion, it is the best practice to include a draft QDRO as an Exhibit to a Settlement Agreement so there are no issues later, but this does not always happen.
We caution divorced spouses that QDROs are not typically included in your attorney’s original fees and not all attorneys will draft these types of orders. Most will tell you that someone else will need to be hired to do it at the conclusion of your divorce, but you may not have realized they did so at a time when you are focused on other things. If you have never seen a copy of the QDRO, or you never received correspondence from the Plan in your own name, a QDRO was probably never completed. Without a QDRO, you won’t get your portion of the Plan. The Court decree is not enough!
When dividing CSRS pensions, the survivor benefit is a maximum of 55%, or it can be awarded for any amount less than that, to a minimum figure, or none.
FERS survivor benefit can only be full (50%), Reduced (25%) or none. Cost for Full is 10%, cost for 25% is 5%.
For civil service, if Former Spouse (not employee) remarries before age 55, the benefit and survivor benefit ceases!!!!! Not like the military that only cancels out the survivor benefit. [I am still working to confirm this, as I can’t find any regulation that applies to the benefit itself, but the speaker at a CLE today from Illinois was adamant that she has seen it happen!!!] I am not confident that language saying that it will continue regardless of the marital status of either of them is sufficient either, as the government follows their own rules.
IF you think your attorney is not familiar enough with these types of plans to divide the asset properly; you think you should have had one done but are not sure it actually happened; or you’re an attorney who wants more information about what we charge and what we can provide to you with your case, please call us.