QDRO
Divorce is a grueling process for most people for a variety of reasons. There’s the emotional toll that results from the breakdown of such an important relationship, stress from the fighting over children and assets, the confusion that comes with an unfamiliarity with the legal systems and laws, and the countless minor details that overwhelm even the most prepared litigants. To compound that, in Michigan, a divorce case can take up to a year to complete, which can easily wear down clients by dragging out this difficult process.
In our more than 25 years of experience handling divorce matters, by the time clients reach the end, and the judge finally signs the judgment and grants a divorce, they are worn out and exhausted, relieved to be done and ready to put the process behind them and move on with their new normal. Lost in that range of emotions is the fact that separating your assets on paper in a judgment of divorce, don’t separate them in life and there is more to the divorce process as there are often many loose ends that need to be tied up and tasks to complete.
One loose end that is often overlooked is separating retirement assets. While a judgment of divorce will describe how the parties are going to separate their retirements assets, indicating the amounts each party will receive from particular accounts, the judgment does not actually operate to separate those assets. In order to separate those assets, a separate order has to be entered by the court. This additional order is a qualified or eligible domestic relations order, depending on what type of retirement asset you’re dividing, that conforms with the terms contained in the judgment of divorce. Your lawyer should be informed on the appropriate one and it should be addressed in the judgment. During the divorce process, you may hear these terms or hear there is a need for a “QDRO” or an “EDRO” and this is what is referred to.
The QDRO or EDRO needs to not only conform with the terms contained in the judgment of divorce, but it also has to conform with the requirements of the retirement plan and applicable federal laws governing retirement assets. Most divorce lawyers are capable of assisting clients through this process, drafting and/or reviewing them, often times with the assistance of an expert in this field, until the assets are distributed. Until the QDRO/EDRO is entered and submitted it to the plan administrator, a client will not receive the retirement funds they are entitled to under the judgment of divorce.
Often times, after a lengthy, draining divorce battle, clients overlook the QDRO/EDRO process and don’t follow through and complete this process. This is a problem more frequently with younger clients that aren’t considering retirement or even have thoughts of retirement on the horizon. It is easy for a client to assume that since there is no pending retirement that there is time to take care of this issue later on in life. This is wrong! Many complications can occur due to delay that could affect your right to receive the retirement funds you are entitled to and counting on receiving. Trouble can occur when a party retires before the QDRO/EDRO is entered and already begins receiving benefits, when the former spouse dies before entry of the QDRO/EDRO, and until recently, a major issue that caused many people issues was waiting too long and losing the right to enter a QDRO/EDRO due to the statute of limitations.
The judgment of divorce is a court order that is a binding legal document and enforceable in the event either party does not comply with its terms. If your former spouse refuses to fulfill their obligations in accordance with that judgment, you can return to court and have the court order him to conform with what was ordered in that judgment. However, there are limitations on the enforceability of it. Specifically, Michigan has a statute of limitations period of 10 years for enforcement of noncontractual money judgments. MCL 600. 5309(3). In the past, courts did not hold firm to this statute of limitations regarding QDROs and EDROs which put not only procrastinators but also those that weren’t effectively counseled by their attorneys, in a bad spot.
Fortunately, the Michigan Court of Appeals recently addressed this issue and provided a solution to those who waited too long. The appellate court made an important distinction as to what the QDRO/EDRO process was that allowed parties to circumvent the statute of limitations issue. Joughin v Joughin, 320 Mich App 380; 906 NW2d 829 (2017). Specifically, the court reasoned that the QDRO/EDRO was part of the divorce judgment and the act of entering a QDRO/EDRO was an administrative task to be completed in conjunction with the judgment of divorce and not an attempt to enforce the judgment of divorce. By making this distinction, that the QDRO/EDRO process is merely completing the paperwork, the dotting of I’s and crossing of T’s, in accordance with the judgment of divorce and not an attempt to collect a money judgment, the court allows parties to avoid concerns regarding the statute of limitations.
This ruling is important because it allows those that have waited over ten years to enter a QDRO/EDRO to do so. Some people may have thought they missed their opportunity but that is not the case anymore. Even for those where the statute of limitations was not a concern, it is still vital to timely complete this process in order to avoid any issues that could arise. While it is important to find an attorney that will assist you with post-judgment matters and ensure that everything is received and completed in a timely fashion, it is not too late to do so. No one wants to delay retirement because they never received the assets they are entitled to and were counting on for retirement, so if you haven’t already completed the QDRO/EDRO process, or have been previously counseled that you are unable to enter your QDRO/EDRO, please reach out to us today to assist you with this and ensure you get the money you are entitled to.
