If you have been contemplating divorce, then you have a lot to think about. If there are children involved, then decisions regarding child custody and child support payments need to be addressed. There may also be a conflict over which spouse will receive certain properties. That is why retirement plans and pensions are sometimes overlooked during this confusion.
In Minnesota, an equitable division of all marital property occurs as a result of the divorce.
That includes retirement accounts and pensions. Dividing those assets may seem like a fairly straightforward affair. You may think that you would simply add up the total of all those accounts and just split them into giving both parties an equal share. Unfortunately, it's not as easy as that.
There is a specific process in which assets must be transferred from a pension or retirement plan. This procedure is done by drafting a Qualified Domestic Relations Order. The QDRO allows the court to order that a spouse, an ex-spouse, a child or some other person can collect money from an individual's retirement plan or pension. This process is considered by the court just as any other component of the division of marital assets.
A QDRO is an effective way to ensure that you and/ or your child's future financial needs are protected. For example, if you should somehow become declared legally incompetent, the QDRO can even allow the payment from the payee's retirement or pension plan to be made available to a minor child's guardian or someone acting as your trustee or agent.
As you can see, a complex asset divorce can be somewhat complicated. That's why you should consult with your family law attorney to ensure that the QDRO process is properly executed.
Source: The United States Department of Labor, "FAQs About Qualified Domestic Relations Order" Aug. 20, 2014