The Biggest Problem With QDROs

According to Edwin Schilling III, JD, one of the most significant problems with QDROs is not having them prepared before the divorce is final. Mr. Schilling lectures attorneys on “The 30 Most Common Errors in QDROs.” (Qualified Domestic Relations Order)

The reason this is such an enormous problem is that after the divorce is final, the former spouse has no rights to something that was not legally addressed. If the participant spouse dies before the QDRO is prepared, the former spouse loses rights to share in the retirement plan. As he says in his program, “Once the marriage is over, if there is not an appropriate order in place, the former spouse has no more rights to the retirement and benefits than does my mother. The former spouse is a stranger to the plan without an order.”

Mr. Schilling says that he has had 13 cases when the participant spouse died before the QDRO was prepared and he had to explain to the non-member spouse that she/he may have lost everything. These cases usually result in malpractice claims against the attorney of record.

Mr. Schilling shares a couple of his worst stories. In the first one, his client was the wife who was married to a Federal Civil Service employee who was not entitled to Social Security. The spouses were in their 60’s and had been married 40 years They had agreed that she would half of his pension and survivor benefits worth more than $3,000 a month. The lawyer for the wife begged the judge to enter Mr. Schilling’s order at the time of the dissolution, but the judge refused and set a follow-up hearing date three months later to deal with property issues. The next week the husband died. How would you like to be the one to tell this lady that she will have no income and that the benefits of 35 years of federal employment were gone?