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Why is a QDRO so important?

On Behalf of | Dec 18, 2018 | Property Division

Some might think that family law attorneys in Phoenix, Arizona, who are handling a divorce or separation primarily work to make sure that their clients’ interests in property are protected vis a vi the other party in the divorce.

Some people may also see their attorneys as their advocate and negotiator, as the one who is supposed to get them the best deal possible.

Indeed, these are both important functions of a divorce lawyer, as the assets and debts a person walks away with following property division can profoundly impact the financial future of that person.

However, much of the important work a family lawyer is also done behind the scenes, sometimes even after the dust has settled and everyone agrees on how the property will be divided. This work ensures that the intention of the court, or the parties, gets carried out promptly.

Take, for example, the case of a qualified domestic relations order, or QDRO. When a retirement plan like a 401(k) or pension is getting divided, one of the attorneys will prepare a QDRO for the judge to sign and then have sent to the administrator of the retirement plan.

If done properly, the QDRO will give the administrator the authority it needs to divide the retirement plan according to the divorce decree, even if ex-spouses are generally not eligible to be participants in the retirement plan. Moreover, the QDRO allows the division to take place without unnecessary tax consequences.

An attorney preparing a QDRO must make sure that it is in the correct form and reads so as to truly carry out the intention of the parties’ agreement. Not doing so can at best delay property division and, at worst, cause significant financial and tax consequences.