When a divorced and or legal separation is processed in California, often times there are community property and debts that are divided. When this community asset and debt division is processed by an agreement (martial settlement agreement or stipulated judgment) the parties can decide how those are divided, and when by default the court and or trial will make orders on this division. A common assets divided in a California family law case is a pension and or retirement account. These are accounts acquired through employment during the marriage. While most people would often think that these accounts are owned exclusively by the employee who managed and contributed to the account, in California these accounts are most of the time a community asset.
A general overview of the asset and debt division process with family law cases in California courts is that community assets need to be divided between to the parties as close to 50/50 as possible. This doesn’t mean that all assets are liquidated and split, but just that the court will take the total value of all assets and debts and try to make sure each party gets a fair share of them. This is easier when parties agree to come to their own terms since they can pick and choose who gets what and so on. In trial/hearing settings these decisions are left to the court based on the facts and evidence presented.
Just like any other asset, a pension and or retirement account is subject to California community property laws of division. Simply put, it needs to be addressed and handled in the division and awarding of all assets. While each case can be different common divisions of these accounts could be each party keep their own account if they are similar in value, one person being awarded 50% of the community interest in another and or a specific dollar amount from an account that represents some equity balancing from other assets.
In any situation when a Judgment (order in a family law case) is entered into the court system and pension or retirements accounts are awarded to the other party, a QDRO may be required. A QDRO, short for Qualified Domestic Relations Order. This is a court order inside of a family law case that directs the account administrator to divide the account based on the court order. An easy way to think about it is that the court divorce/separation order directs orders onto the parties of the case, but not a 3rd party entity. The QDRO is a court order directing a third party to comply with a court order that addresses an asset they manage or control.
QDROs are often done after a divorce/separation judgment has been entered into the court system. This is because until that order to divide an account is done, it is unknown what amount or percentage of division should be order in the QDRO. While there is no court required time frame on completing these QDROs it is easier to have them done immediately after the judgment has been entered into the court system. In some cases parties may be restricted from retirement or their benefits if they are not done as plans want to make sure any entitled party receives their share before making distributions from the account.
If you are processing a divorce or legal separation in California and there is at least one retirement or pension account to be divided, you should contact a family law attorney so that they can advise you of your rights as it pertains to your specific situation. While QDROs are common, not all family law attorneys process them. If you have trouble finding one who does, you can refine your search to QDRO Attorneys or sometimes called Pension Division Attorneys. While Just Document Preparation processes QDROs for consumers, sometimes parties not local to our offices prefer a local partner rather than online/phone services. For those who want to save some money, our complete QDRO process may be a good fit.