[author- Matthew Lundy]

The purpose of a settlement agreement is to resolve some or all of the outstanding issues in a pending case.  In the divorce context, it is common for attorneys to use broad language in their agreements related to the division of retirement plans.  This can prove problematic if you are not careful.  Here are three tips that will help you avoid post-agreement and/or post-judgment disputes over retirement account divisions:

1.  Identify all plans by formal plan name.  It is not sufficient to refer to one party’s retirement, or even one party’s retirement with a specific company.  For example, while a person may be an employee of the government, the government has several different retirement plans setup through several different agencies.  So if one party works for the post office, and one works in the foreign service, then these two parties participate in different federal pensions, each with its own rules and benefits.  If you do not specify which plan these parties are in, then further, potentially post-judgment discovery may be necessary.

2.  Be specific about valuation.  Do not use broad marital portion language, leaving it to the parties or the plan to determine for themselves what is “marital.”   This is especially true in the context of defined contribution plans (such as 401(k)’s, ESOPs, and profit sharing plans).  Plans are not required to maintain lengthy records for their participant’s accounts. So, information relating to pre-marital benefits will likely not be held by the plan if the parties were married more than two or three years prior to the divorce.  Further, the parties are often not forthcoming with documents after executing a settlement.  Thus, if you do not specify a specific value to the benefit being transferred, then further, potentially post-judgment, discovery may be necessary.

3.   Do not leave the parties in a position where they have to work together to complete the QDRO.  If the parties have to share in the expense of the QDRO, have them exchange payment or fill-out QDRO engagement forms at the same time that they are executing their agreement. If one party is in a position to delay the other party from getting their QDRO done, they very well may do so. So if the parties are to share in the expense of the QDRO or provide documents to effectuate the QDRO, you might want to consider taking the money in trust and getting those documents in advance of the clients executing the agreement.