David Bulitt: [00:00:00] Welcome to JGL Law For You. JGL Law For You is a podcast by lawyers, but not for lawyers only. On JGL Law For You, we will be discussing a wide array of topics to help you navigate the many legal processes, developments in the law, other current events, and how they may affect you, your family, and your business.

or your business. We're in the area of family law talking to my partner Lindsay Parvis. Lindsay has been practicing for over 20 years. She's focused on helping her clients navigate some of life's biggest challenges. Divorce, custody, domestic violence, and financial matters like alimony, child support, and property division.

She makes complex information and advice understandable and manageable as we will all hear a bit about today. Lindsay's services include representing at Advocacy for Those Clients, Parent Coordination and Mediation. Welcome, Lindsay. Good to see you. Thank you, David. It's a pleasure to be here. So the world, Lindsay, is full of acronyms, right?

And [00:01:00] today we're talking about one that is very important to you and to your clients in the world of divorce. And I'm talking about an acronym that goes like this, QDQ. I want you to tell us what that is, and we'll start from there. Sure.

Lindsay Parvis: So, quadro is, at its simplest, a court order to transfer retirement from one spouse to the other, and commonly used in divorce.

So when you say transfer retirement, What does that mean exactly? It can mean a couple different things depending upon the type of retirement plan. And I'm going to use quadro throughout this podcast, but as you know David, because you're a family lawyer too, sometimes these orders have different names and sometimes different names are required, but they're all in this nature of retirement transfer [00:02:00] order.

When it comes to transferring retirement, sometimes these orders are moving money from one spouse's account to the other, like a rollover. It's cash and investments that are in a retirement account. Maybe one spouse has more than the other. And so the one who's receiving retirement gets a rollover and a court order can be needed to make that happen.

Then there's a different type of retirement, which looks like a pension. So it's based upon the employee's income and based upon their years of service. That retirement transfer order is about the non employee's spouse getting a share of the monthly pension when it's paid out.

David Bulitt: Okay. So first question, why do we even need a court order?

Why can't I [00:03:00] just, you know, if you and I are Divorcing and I have 100 and you have 50 and we need to say that's a simple example, but if we need to even things out, why can't I just cut your check for 25 and, and we're squared up. The retirement accounts are square. What do we need a court order for?

Lindsay Parvis: Well, there are a couple of factors that require people to need court orders.

Oftentimes retirement. is one of the largest assets that people have. And it's not something that's just cash, like money sitting in a bank account, and the money needs to go from one spouse to the other, and they usually don't have Other assets that are big enough if they wanted to do a trade and another consideration in that is that a lot of retirement assets, not all, but a lot of retirement accounts are pre [00:04:00] tax.

And so it's not as simple as I want to pay you One dollar of cash that's sitting in my bank account that there's no additional tax to pay on. I want to pay you that in exchange for retirement that's pre tax and that when it is distributed. The person who receives it is going to have to pay income tax on it.

David Bulitt: Okay. If I can roll back just a little bit, I'm going to make my example a little more likely as opposed to a hundred dollars in a retirement. Let's say there's, let's say we've been married right for 20 years. And during that 20 years, I've accumulated a hundred thousand dollars in my account. And because I've worked at, you haven't, you have nothing in your retirement account.

We have to equalize. Those accounts. It's not a pension like you talked about. It's one that actually has a balance, some amount of money in it. Does that money, if I were to take money out of my retirement, I'm subject to the possibility of paying interest and penalties if I take it out too [00:05:00] early. So if I take out that 50, 000 per this order that you're talking about, am I going to get taxed or are you going to get taxed on that?

Lindsay Parvis: On that side of things, If someone said, I'm not going the quadro route, I'm not going to have a court order and I'm going to just withdraw money from my retirement account and pay it over to my spouse, that's exactly what's going to happen, what you pointed to. There can be early withdraw penalties and income taxes, state and federal can be due.

But if you go the quadro route. The transfer happens like a rollover without triggering the early withdrawal penalties or the income taxes as long as the money gets deposited into or rolled over into a retirement account.

David Bulitt: If it's done that way, like you're talking about pursuant to this qualified domestic relations order.

[00:06:00] It's a non taxable event. I don't pay taxes as the one the money's coming out and you wouldn't pay taxes as the person who would ultimately receive it into your account.

Lindsay Parvis: That's right. And people do have to be careful when it comes to quadros of a couple things. One of which is making sure that when this rollover happens, If it's not going directly into the receiving retirement account, but it's being cut as a check that needs to be endorsed over and deposited into the retirement account, you need to do that deposit on time, because if you hold on to that check too long, or if you don't deposit it the right way, then you can end up Unintentionally receiving the money yourself and having to navigate tax and early withdraw penalties.

David Bulitt: Okay. So before I talk to you about the process and how you get one of [00:07:00] these orders done, let's talk about that other type of order that you mentioned. That was where we, where we have a pension or an annuity or something along those lines. So Joe Smith, you know, has earned his pension with the government over his 25 or 30 years of service.

Okay. Um, he's going to be retiring whenever he retires. He hasn't decided yet. And he's in the process of getting divorced. And his spouse is entitled to her share because it was earned during their marriage. How does she get it if he doesn't have it today? So, you know, he knows it's supposed to come, but how does she get her share of what she's entitled to out of his, out of his pension?

Lindsay Parvis: Right, so it's having a quadro and either, there are some other court documents that go along with it, but that quadro is the important one, and that's the court order that tells the pension plan that when the employee retires and starts to [00:08:00] receive monthly pension payments, that the ex spouse will receive A portion of those payments, and it tells the plan how much that spouse is supposed to receive, whether it's a dollar amount.

Or it's a formula, or it's a percentage. The order has to contain all those details, plus that order also usually talks about things like early withdraw, or, or cashing out of the pension, whether or not that's allowed, and survivor benefits. So, if the employee passes away before the ex spouse, does the ex spouse continue to receive, uh, pension payments after the passing?

David Bulitt: Yeah, I mean, I would think that if I'm the, The non employee spouse. I want to make sure that I'm going to get my share whether in the event that I outlive [00:09:00] my spouse. How does, how does that work? You know, let's just say, let's use this, stretch that, keep that walking through. So now I'm killing you off and uh, uh, yeah, but I'm still here.

Right. So, and we signed this agreement and should there have been something in that qualified domestic relations order when we were divorced or in the agreement that we signed? That protects me so that I get my share, even though you're not around anymore. I'd just rather kill you than kill me. So that's, sorry, just kidding.

Lindsay Parvis: No, no, I get it. The quadro needs to spell it out. If the ex spouse is going to get a survivor benefit, it's got to be in that court order and you've got to elect it. And you have to be careful with some plans about when this quadro is entered. By the court. So when it's processed by the court, when the employee is already retired.

So [00:10:00] there's some really sensitive dates that can come into play. That's a little frolic and detour from the topic. But yeah, it's got to be in that order. And sometimes people make different choices about whether they receive a survivor benefit or not. Some plans have exclusions that if the ex spouse remarries before a certain age that then they lose the right to the survivor benefits.

So sometimes you look at things like, well, maybe it doesn't make sense to have a survivor benefit, and instead it makes sense to have a life insurance policy. And to have that life insurance continue without an end date that's connected to remarriage. And of course, another consideration for survivor benefits is the cost.

Because survivor benefits oftentimes have a cost [00:11:00] associated with them, and they get paid by being a deduction from the monthly pension payment. So while the monthly pension, nobody's passed away. So before anybody's passed away, the monthly pension gets reduced to pay for the cost of this survivor benefit.

And you've got to navigate. and negotiate who's paying that cost and or how is it split between the employee and the ex spouse. And there can be reasons because of overall property division or other financial considerations like life insurance that exists instead as to maybe why you would or would not have a survivor benefit.

All of that boils down to it's not an easy one size fits all answer, and that's the big takeaway.

David Bulitt: You mentioned timing. When in the process of a divorce matter does this [00:12:00] qualified domestic relations order get prepared? And how is it prepared? How do you get it done? Right.

Lindsay Parvis: On the how does it get prepared, it gets written up by a lawyer.

And the question becomes, whose lawyer prepares it? Is it a lawyer who represents one of the spouses in the divorce? Or sometimes the spouses will instead hire an outside lawyer to draft the quadro. So someone who doesn't represent Either one of them in the divorce and having been their advocate and, um, their own personal attorney, but this is someone who's serving in a neutral role or yet another scenario, sometimes if one spouse is responsible for drafting the quadro, their attorney will then hire a quadro drafting attorney to prepare it.

But it all boils down to, this is something an attorney needs to prepare. [00:13:00] This is not a DIY document because there's too much at stake financially. So that is the who prepares it, the when does this happen in the divorce process, there's an ideal point when it happens, and then there are all the other times after that when it also can potentially happen.

Ideally, the quadro is prepared at the same time, if there's a settlement, that the settlement document is also being signed. So everybody's signing off on everything at the same time. Sometimes that's not possible because people are not settling and they're having a trial and they don't know what the retirement division is going to be because a judge is making that decision for them.

So sometimes the quadro is prepared immediately after [00:14:00] a judge grants a divorce. But doing it as soon as possible after the divorce is granted, you've got to side note, decide whether there are any appeal issues and figure out how those fit in with that. But doing the quadro as soon as possible after the judgment of absolute divorce is the next best option.

And then any time after that is doing it as soon as possible.

Really, delay causes way more problems for people. With Quadros, then it helps anyone.

David Bulitt: Are they all the same? I mean, I know there's the two tight, we talked about the pension and then the, the where you rollover, but are all these quadros the same for everybody's pension or the same for everybody's rollover?

Are there differences and if so, if there are differences? How do you figure that out as a lawyer who's drafting? Good

Lindsay Parvis: [00:15:00] questions. And no, these orders are not the same for every type of retirement plan. You can't just have one quadro that fits every plan. And it means for attorneys who draft quadros, they have to stay on top of what is the plan, what are all the different benefits and nuances of that plan that can be negotiated and accounted for in the quadro, and that's what the quadro is.

That then cuts into settlement negotiations too, right? You've got to understand what the plan provides for what you're negotiating. It also comes into play when litigating these cases and having trials and understanding what it is you're asking the court to order and helping the judge understand that and why it's important.

So there's a lot to know and understand about these plans. That's why there [00:16:00] are Quite a few attorneys who have chosen quadro drafting as their niche because it's not that they see the same retirement plans Over and over and over again all the time, but they tend to see some repetition and they develop familiarity overall with the plans and some of these attorneys, these quadro drafting attorneys charge fees in a different way.

They may do it as a flat fee, and so this is one of those decision making points that a client and their lawyer Have together about who best to be the advisor about the retirement plan and be the drafter. Of the Quadros and when to onboard that person if they are referring it out and using an outside person and looking at that cost [00:17:00] compared to having their own attorney do that work themselves.

David Bulitt: And as part of your representing a client. Globally, and there's this issue of a retirement account that's going to be split regardless of whether it's a pension or some sort of rollover as you discussed, is that an important issue for you to talk about with your client relative to, we're not financial planners, but relative to, you know, what's your life going to look like down the road after the divorce?

And what can you expect to get from this asset that you're going to get your share of?

Lindsay Parvis: Oh, sure. And looking at the short term picture about what the short term needs are, but also situating it in the long term. This kind of reminds me of the conversations that lawyers often have with their clients about, do you try to keep the house?

And buy out the other spouse and maybe have to refinance and take a lot of equity out and keep that house and what are the benefits of doing [00:18:00] that in the short term and what are the benefits of doing it in the long term and how does that One particular decision fit among them all. So yes, those conversations happen with retirement, just as they do with other assets.

And you're right, we're not financial planners. And We also do this work over and over and over again, so we do see the experiences of our clients and we're at least able to, I think, alert our clients to some things that would benefit them to think about when they're making these big decisions in the midst of a big life

David Bulitt: change.

Very interesting. And again, folks, you heard it from Lindsay. This is not DIY. This is not whatever that channel is that the gains are on where everybody builds their own stuff, right? You know, you need, you need some expertise, someone who knows what they're doing. To handle these [00:19:00] types of issues. And Lindsay, what's the best way for folks to get ahold of you if they wanna talk to you about their case?

Lindsay Parvis: Sure thing. That's by calling, uh, me at the office, which is 2 4 0 3 9 9 7 9 0 0.

David Bulitt: Alright, folks, you're heard it. Give Lindsay Parvis a call. Do not try to do your own retirement benefits order. That is a disaster. Call Lindsay. 240 399 7900. Is that right? Yep. And David,

Lindsay Parvis: you do this work too. So yeah, definitely reach out to David on this.

It's important across the board. The assets are too big and too important for people to Dabble around and trying to do it themselves.

David Bulitt: No, it's your it's it's folks futures and you have to realize that's your future. You'd be you've been together and married and this is something that you may need. You may not think much about it when you're in your 40s.

But trust me, when you hit your 60s, you're gonna be thinking about it and be glad that it's there. So, [00:20:00] folks, thanks so much for listening in. We will hear you and see you and speak to you next time. This is JGL Law for you.