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The no-no's behind QDROs

Attorneys specialize in certain categories of law the way a cardiologist might excel in performing heart transplants. Family law attorneys handle divorces, but not every lawyer who practices family law is skilled in splitting retirement accounts.

Advisors recommend that spouses, working to untie complex financial knots during divorce, seek the expertise of lawyers with solid understanding in the complicated ins and outs of marital property division.

Retirement benefits are assets that often defy a simple and clear split. The provisions for distribution vary with different types of retirement plans and can supersede court orders issued to divide them. Finding a legal resolution for a conflict between a court-issued Qualified Domestic Relations Order and a stubborn benefits plan can be an expensive, time-consuming and even fruitless journey.

Divorce lawyers with long asset-division experience create solutions for pension benefits' separation that help spouses avoid costly legal backtracking. Some retirement plans are indivisible and immune to QDROs, which are court orders clearing the way for pension benefits to be paid to someone other than the employee-account owner. A court order cannot change the pay-out method of a pension plan that forbids division of benefits.

Many U.S. employee retirement plans are "qualified" and can be split during divorce without problems. The exceptions are some local and state-level government plans and non-qualified retirement plans that impose unshakable restrictions on payment of benefits.

Divorcing spouses are advised to establish whether a divorce attorney has the knowledge to handle the intricacies of retirement benefits division. Clients can make the asset division process easier by supplying divorce lawyers with as much information as possible about pension plans in question.

In some cases, an attorney may suggest the hiring of a financial expert to make certain no subtle details of a retirement plan are misinterpreted during a divorce settlement. When it comes to the spousal division of pension benefits, legal advisors and clients can never be took picky about making certain the plan is divisible.

Source: huffingtonpost.com, "How To Make Sure Your Divorce Lawyer Does Not Screw Up Your Retirement Benefits," Emily W. McBurney, April 12, 2012

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