Divorce is never an easy process, but when you have children it can be even more complicated. If you and your spouse are splitting up and you’re worried about what will happen to your shared assets and debts, you may want to consider a Qualified Domestic Relations Order (QDRO). A QDRO is a legal order that allows one parent to receive payment from the other parent’s retirement account without having to pay taxes on the money. In this blog post, we’ll provide a practical guide to QDROs in Arizona and answer some of the most common questions people have about them. Keep reading!
The Benefits of Qualified Domestic Relations Orders (QDRO) in Arizona
There are many benefits of having a QDRO in place during a divorce. One of the biggest advantages is that it allows you to split your retirement assets without having to pay taxes on the money. This can be a huge relief, especially if you’re already dealing with the financial stress of a divorce. Additionally, a QDRO can help you avoid early withdrawal penalties from your retirement account.
Another benefit of a QDRO is that it can provide some stability during a time of upheaval. If you have children, a QDRO can ensure that they continue to receive support even if one parent dies or becomes disabled. Additionally, a QDRO can protect your assets if your spouse files for bankruptcy.
Finally, a QDRO can give you more control over your retirement assets. For example, if you’re the primary breadwinner in your family, you may want to keep all of your retirement assets in your name. Or, if you’re worried about your spouse’s ability to manage money, you may want to put some restrictions on how the money can be used.
Qualified Domestic Relations Orders (QDRO) in Arizona – The Process
There are four steps involved in getting a QDRO in Arizona:
- Determine which assets are eligible for division. For an asset to be eligible for division through a QDRO, it must be considered a “retirement asset.” This includes 401(k)s, 403(b)s, pension plans, profit-sharing plans, and IRAs.
- Draft the QDRO. The next step is to draft the QDRO itself. This document will need to be signed by a judge to be valid.
- Submit the QDRO to the plan administrator. Once the QDRO has been signed by a judge, it must be submitted to the plan administrator. The plan administrator is responsible for ensuring that the terms of the QDRO are met.
- Begin receiving payments. Once the QDRO has been approved by the plan administrator, you can begin receiving payments from your spouse’s retirement account.
These payments will continue until the account balance is depleted or you reach retirement age, whichever comes first.
Strategies for Obtaining a QDRO in Arizona
There are two primary strategies for obtaining a QDRO in Arizona:
1. Negotiate with your spouse.
The first option is to try to negotiate a QDRO with your spouse. This can be beneficial because it allows you to come to an agreement that works for both of you. However, it’s important to keep in mind that not all spouses will be willing to negotiate a QDRO.
2. Obtain a court order.
If you’re unable to reach an agreement with your spouse, you can ask the court to issue a QDRO. This option can be more expensive and time-consuming than negotiating with your spouse, but it may be the only option if your spouse is unwilling to negotiate.
The 5 biggest mistakes people make when getting a QDRO in Arizona
1. Not knowing what assets are eligible for division.
One of the most common mistakes people make when getting a QDRO is not knowing which assets are eligible for division. Remember, only “retirement assets” are eligible for division through a QDRO. These include 401(k)s, 403(b)s, pension plans, profit-sharing plans, and IRAs.
2. Not having the QDRO drafted by an attorney.
Another common mistake is not having the QDRO drafted by an attorney. While it’s possible to draft the QDRO yourself, it’s often best to leave this task to a professional. This is because there are many technical aspects of a QDRO that need to be handled correctly.
3. Not submitting the QDRO to the plan administrator.
Once the QDRO has been signed by a judge, it must be submitted to the plan administrator. The plan administrator is responsible for ensuring that the terms of the QDRO are met. If the QDRO is not submitted to the plan administrator, it will not be valid.
4. Not following the terms of the QDRO.
Once the QDRO has been approved, it’s important to make sure that you follow the terms of the agreement. If you don’t, you may be subject to penalties or lose your right to receive payments from your spouse’s retirement account.
5. Not getting professional help.
Getting a QDRO can be a complex process, and it’s often best to get professional help. An experienced attorney can guide you through the process and help ensure that everything is done correctly.
Qualified Domestic Relations Orders can be a helpful tool for dividing assets during a divorce. If you’re considering a QDRO, it’s important to understand the process and the benefits. Additionally, you’ll need to decide whether you want to try to negotiate with your spouse or obtain a court order. No matter which option you choose, a QDRO can provide some stability during a difficult time.
Are You Looking for a Family Law Attorney You Can Trust?
The attorneys at GillespieShields are well-versed in a variety of different legal fields, ranging from family law to civil suits, employment disputes and probate cases. Although we specialize in several areas of practice, our greatest passion is family law. We believe in giving families peace of mind no matter their situation, and we fight hard to maintain that peace. Whether you’re filing for dissolution or divorce, determining custody of your children, or thinking about adopting children, our experienced attorneys are here to help you every step of the way. During our private, one-on-one consultation, we’ll take the necessary time to answer any and all of our questions surrounding Arizona’s family laws, your family’s unique situation, and the possible court outcomes. Contact us today for your consultation!
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