California Divorce Lawyer Blog

So, your divorce is final, the house has been sold, and you've reached agreement with your former spouse regarding custody, visitation and support of your children together. You're done, pour the champagne and launch the fireworks... or not?

If your Judgment of Dissolution includes the division of retirement and/or pension accounts, you may not be done after all.

Some retirement plans fall under the body of federal law known as the Employee Retirement Income Security Program or ERISA for short (29 U.S.C. Chapter 18). If the retirement plan in question falls under ERISA (also called a "qualified plan"), then your Judgment of Dissolution may not be sufficient to protect the interest of the non-employee spouse.

This is one of those times that it helps to understand the relationship between California law and federal law. The Supremacy Clause of the United States Constitution requires that state laws must yield to federal laws whenever the United States Congress creates laws as permitted by its delegated powers.

Practically what this means with respect to these "qualified" retirement accounts is that you must obtain two orders from the family court: the first order (generally the Judgment of Dissolution) defines the community property rights of each party in that particular retirement account. The second order is called a Qualified Domestic Relations Order, or QDRO (pronounced "quad-row") for short. The QDRO is a specialized order from the family court that complies with all of the requirements in the federal ERISA law to actually make the division of the retirement account happen. QDROs are highly specialized orders that are best prepared by an attorney familiar with ERISA requirements as well as with the retirement plan's own unique requirements.

The consequences of failing to prepare and serve an appropriate QDRO on the retirement plan are serious. The non-employee spouse may lose out on survivor benefits, or may have to pay substantial taxes on his/her retirement distribution, or may under some circumstances lose ALL of his/her interest in the retirement plan. Make sure that you don't simply file your Judgment away in a file cabinet if retirement plans are to be divided, but instead move forward immediately with the preparation of the necessary QDROs to ensure the plans are properly divided between the parties. I generally suggest that the QDROs be prepared at the same time as the Judgment and not left until afterwards.

For more information about the division of retirement accounts, community property and other California family law issues, please contact attorney Gary D. Sparks.

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Posted In: Community Property

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So what do you do when you're getting a divorce in California and you have a home that is rapidly losing value? Who gets to keep the house? How can you sell it when the home is worth less than what you owe on it? How do you get the home sold as quickly as possible while there still is some equity in it, but your spouse refuses to move out or cooperate with you?

Unfortunately, there are no easy answers to these questions, and the detailed responses necessary to address all of them adequately could take weeks to write. We are obviously in difficult economic times, both here in California and nationally. Property values (except for very expensive, high-end homes) continue to plummet, and more and more clients are faced with the reality that the home they thought had hundreds of thousands of dollars in equity is actually upside down, or close to it. Not to mention those homes facing foreclosure.

As family law attorneys, we are charged with looking at a wide variety of solutions for families facing a brutal economy at the time of their divorce. The family residence may be community property, but what happens if the the house has no equity? What if you want to keep the home because you are convinced the market will recover next year, but your spouse insists that it must be sold? The truth is, the solution that is right for one family may not be right for the next family. On top of that, we have to consider what the mortgage lender(s) will and/or won't be willing to agree to in the aftermath of a divorce. Maybe your case is appropriate for a "deferred sale" agreement, whereby both spouses maintain title to the home but it is agreed that the home will sell at a future date and the proceeds split at that time. Or maybe your spouse is willing to keep the house and the debt while you simply want "out" and to get a fresh start.

In these troubled times, it may be worth a consultation with an experienced family law / divorce attorney who can help you with these questions. Even if you plan on handling your divorce yourself without an attorney, an attorney can help you understand your rights and obligations, offer suggestions to help ease the transition from married back to single life, and provide a range of possible alternatives for what to do with the family home (and the pros and cons of each) that perhaps you hadn't yet considered.

For more information about community property division and other California family law issues, please contact attorney Gary D. Sparks.

Posted by Gary D. Sparks | Permalink | Email This Post

Posted In: Community Property

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