Who pays the QDRO fee?
I am seeing more and more cases where parties are fighting over who pays the QDRO fee to have an order drafted for the division of a retirement plan. There is certainly one way to avoid that battle. Spell out in your settlement agreements who has to pay for the QDRO draft. Routinely, both parties should have to pay equal for the drafting, even when it arguably benefits one party over the other. It is a necessary expense as part of the divorce to have the retirement benefits drafted by appropriate court order, and a qualified domestic relations order is the means to have the retirement accounts divided.
In the absence of the parties agreeing to how it gets paid, an appropriate motion may have to be filed with the court to order that each party pay one half. Further, even where it is ordered or agreed upon, and one party fails to pay, it may take a contempt motion filed against the other party to compel them to pay. Another way to do it to expedite payment, is to front the entire fee to make sure the QDRO gets promptly drafted, particularly where you are the recipient of the retirement benefits, and if the other party fails to pay you back for their one half share, then proceed by filing a contempt motion with the court?
Is the attorney obligated to pay the QDRO fee if you are represented? I think the answer to that question may vary depending on whom you ask, but my opinion is no. It is the litigants’ responsibility to pay for the out of pocket expense to make sure the qualified domestic relations order is properly drafted. It is the divorce attorney’s obligation to make arrangements to have the QDRO drafted, and the failure to do so may be possible malpractice and/or an ethical violation, but once arrangements are made to have the document drafted, it is the client’s responsibility to pay for the cost.
What should the attorney do if a client isn’t cooperating and paying for the QDRO draft? The attorney has several choices; (1) the attorney can front the processing/drafting fee and worry about getting paid back by the client later; (2) the attorney can file a motion and withdraw from the case, upon reasonable notice to the client or (3) the attorney can send a detailed letter to the client about the importance of having the QDRO drafted and completed but they are not going to pay and advance the fee for the client.
Retirement benefits in a divorce can be some of the most lucrative assets of the marriage. It is important that all retirement benefits are researched out during the divorce process and proper discovery is made of all retirement benefits. Once all retirement benefits are properly identified and valued, and they are considered as part of the division of the marital estate, contemporaneous with the divorce being granted, it is incumbent upon the parties to promptly have all QDROs drafted, filed, filed with the court and sent to the plan administrator for the division of the retirement asset. Where there are attorneys involved, it is the divorce attorney’s responsibility to take care of this, except there is no legal obligation for the attorney to have to pay for it out of pocket when it is the client’s responsibility to pay the cost.
If you have questions on how to divide up retirement benefits when going through a divorce, contact the experienced family lawyers at Karp & Iancu, S.C. today.