Phillips & Ingrum

Why You Need a Local Lawyer to Draft a QDRO

By Grayson Cannon

coins-pens-83014746Some of our past blog posts have discussed the Qualified Domestic Relations Order, also known as a QDRO for short.  This is a special type of order that is required to divide certain types of retirement plans as part of a divorce.

Why Do I Need a QDRO?

QDRO’s are usually prepared and submitted after the Final Decree of divorce has been entered.  This is because the parties are typically using the date of the divorce as the official date for the retirement plan to divide the plan between the spouses so we need to know the date of the divorce before completing the QDRO.

Clients will often tell me that they are frustrated because they don’t understand why they need a separate court order, or why their divorce lawyer would not draft it for them.  The separate court order is typically required because the retirement plan being divided is subject to certain federal laws designed to protect retirement plans and those laws mandate that certain language be used to divide a retirement plan participant’s interest in the plan.  In the case of some federal and other government plans, even if a QDRO is not required, there may be other specialized language needed in an order to cover plan requirements, and so a separate order just addressing the retirement plan is used to make sure everything is put in the order to make it work.

It’s important to get that language right or the plan can reject the order and refuse to divide the plan.  It is a fairly specialized area of the law and many attorneys don’t feel familiar enough with the procedure to prepare these documents.  There are many different kinds of plans and many different rules and procedures that may apply.  In many cases, the divorce lawyers only know that there is a plan that needs to be divided, and the percent or amount that should be assigned to each party, but don’t know any details about the plan involved or what that plan would require.  So for this reason many divorce attorneys refer their clients to another lawyer or firm to get the QDRO or other division order completed.

Why Do I Need a Lawyer to Prepare My QDRO?

I’m also often asked, “Do I really need a lawyer to do this?”  Many have heard that there are investment counselors or other non-lawyer professionals found on the internet that will prepare a QDRO for a cheap, flat fee.  Or that there are “forms” on the internet that they can fill out.  However, it is important to remember that these are court orders, not just forms.  If you have never drafted and submitted a court order and don’t know the procedures involved or the court rules that apply, you are engaging in a risky form of self-help with what may be one of your largest marital assets and your retirement future.  Preparing these documents may involve understanding what type of plan you have, using legal terms found in federal law, as well as being able to review and apply convoluted plan rules to your specific situation.  You may be making profound choices that may have a significant impact on how much money you get.  If you do not understand what you are putting in a document or the legal effect of this language, you have absolutely no business preparing your own QDRO.

Non-lawyer preparers are also at a disadvantage.  They don’t know court procedures and cannot submit the order on your behalf – they must prepare it for your signature and you must sign and be responsible for the wording because they cannot practice law.  Many times, because the parties were unfamiliar with the specific benefits provided by a plan, the parties have not adequately negotiated all of the aspects of a QDRO or the Court has not been given enough information at the final hearing to give the parties a complete order dividing the plan benefits.  What may result is some form of litigation being necessary to provide complete information to allow preparation of a QDRO.  A non-lawyer QDRO preparer cannot handle this for you and may even make things worse by submitting incorrect or inaccurate QDRO documents to the court that will have to be amended later, if it is not too late to amend them.  Having a licensed attorney in your jurisdiction to prepare your QDRO or other dividing order avoids these kinds of problems.

What about the whole “low, flat fee” thing?  While that may work for lots of QDRO preparation situations, when it does not work the person you paid a lowballed flat fee to is not going to be motivated to spend the time to deal with any problems that arise.  They may even withdraw from the representation because they can no longer help.  At our office we charge a retainer which is applied to our hourly rate, usually $500 if only one order is involved.  We will do our very best to accomplish your QDRO for that amount.  But if problems arise, we are there and able to go to bat for you to resolve the problems at our hourly rate once the retainer has been used in full.  We provide experienced litigation services and are familiar with the laws and rules that apply to your case.  No matter which lawyer you use, having an experienced local QDRO attorney prepare your documents – whether QDRO or other type of order – to divide your valuable retirement assets, is worth doing right and not just doing cheap.