The retirement benefits of members of the military are also not divided using a QDRO because these benefits are not subject to ERISA.  Instead, military retirement pay is divided using a Court Order, which will meet all the requirements of the relevant federal laws and regulations.  Central to the division of military retirement pay is the Defense Finance and Accounting Service (“DFAS”), which is akin to the Plan Administrator for private defined contribution and defined benefit plans and to the Office of Personal Management for federal civilian retirement.

A minimum of twenty years of service is required for any member of the military to receive retired pay, unless the service member is forced to retire because of disability.  Military retirement benefits are computed under one of three formulas which is keyed to the year the service member entered active duty; partial credit is given for service in the Reserves or National Guard.  Only Disposable Retired Pay, which is the service member’s total monthly retirement pay less deductions for previous overpayments of retired pay, forfeitures ordered by a court martial, certain disability retirement payments, and the amount deducted to provide a Survivor Benefit Plan annuity for a spouse or former spouse pursuant to a Court Order, can be divided by a Virginia Court in the context of a divorce.       

As with the retirement benefits of federal civilian employees, a portion of the service member’s Disposable Retired Pay cannot be paid to the former spouse until the service member actually retires.  Additionally, any survivor benefits awarded to a former spouse will stop if the former spouse remarries prior to the age of fifty-five. (Though, if the former spouse’s marriage terminates by death, divorce, or annulment, the payments can be reinstated.)  However, survivor benefit coverage must be elected by the service member on or before his retirement, even if they are required by Court Order.  As a result, a domestic attorney representing the estranged spouse of service member (or former service member) must be mindful of the service member’s date of retirement.

The retirement benefits of federal civil servants are not divided using a Qualified Domestic Relations Order (“QDRO”) because these benefits are not subject to the Employee Retirement Income Security Act (“ERISA”).  Instead, the retirement benefits of federal civil servants are divided using a Court Order referred to as a “Court Order Acceptable for Processing” (“COAP”), which will meet all the requirements of the relevant federal laws and regulations.  Central to the division of federal civil service retirement benefits is the Office of Personnel Management (“OPM”), which is akin to the Plan Administrator for private defined contribution and defined benefit plans.

An employee of the Federal government (other than those who are military personnel, who are treated differently) will be covered either by the Civil Service Retirement System (“CSRS”) or the Federal Employees Retirement System (“FERS”) depending upon when he or she began working for the federal government.  (Though, under certain circumstances, CSRS participants were able to switch to the FERS once it became available.)   CSRS participants are enrolled in a defined benefit plan similar to the pension of a private company.  However, they are not covered by Social Security and, before their retirement, they do not pay Social Security tax on their earnings.  FERS participants, on the other hand, are covered by Social Security and do pay Social Security taxes on their earnings.  In comparison to their CSRS counterparts, though, they receive a much smaller defined benefit upon retirement.  But, FERS participants are enrolled in a 401(k)-like system called the Thrift Savings Plan (“TSP”).

When dividing the pension component of federal civil service retirement benefits in the context of a divorce, it is important to remember that there are three separate types of CSRS or FERS benefits subject to division: employee annuities, refunds of employee contributions, and former spouse survivor annuities.  The participant’s TSP is also subject to division in a divorce.  A well-versed domestic attorney will assist the client in negotiating a settlement that maximizes his or her potential eligibility for these components.

A defined benefit plan is an employer-sponsored retirement plan where employee benefits are determined pursuant to a formula which may involve factors such as salary history, duration of employment, or other criteria.  Pensions are examples of defined benefit plans.   

In the context of a divorce, the Court may award the non-participant spouse up to 50% of the “marital share” of the participant’s defined benefit plan by QDRO.  The awarded portion of the marital share may take the form of a specified percentage of the account balance, or a fraction/percentage of the marital share defined as of a certain date.  In addition, the non-participant spouse may be entitled to a portion of other economic improvements on the participant’s benefit, depending upon the features of the particular plan and what is ordered by the Court or agreed upon by the parties.

In the course of negotiating a settlement or preparing for trial, one issue to be considered is whether the non-participant spouse will take his or her share of the participant’s defined benefit plan as a shared interest or as a separate interest.  Each of these options has benefits and disadvantages and must be considered carefully in the context of the particular defined benefit plan.    

If a shared interest is selected, the payments to be received by the non-participant spouse will begin at the same time the participant begins receiving his or her benefit, and will be made to the non-participant spouse in the form elected by the participant.  The payments to the non-participant spouse will also cease upon the death of the participant unless survivorship benefits are negotiated, because the duration of the benefit is keyed to the participant’s lifetime.  This method for dividing a defined benefit plan is sometimes referred to as an “if, as, and when received” approach.

If a separate interest is selected, the payments to be received by the non-participant spouse may begin, within the parameters of the particular plan, when the non-participant spouse chooses, and will be made to the non-participant spouse in the form he or she elects (again, within the parameters of the particular plan).  The payments to the non-participant spouse will not cease upon the death of the participant because the duration of the benefit is keyed on the non-participant spouse’s lifetime.  Unfortunately, if the participant is already in pay status, this method for dividing the participant’s interest in the defined benefit plan is usually not available.     

A defined contribution plan is an employer-sponsored retirement plan where the amount of the employer's annual contribution is specified and the employee can also elect to make contributions.  401(k) plans and profit-sharing plans are examples of defined contribution plans.   

In the context of a divorce, the Court may award the non-participant spouse up to 50% of the “marital share” of the participant’s defined contribution plan by QDRO.  The awarded portion of the marital share may take the form of a specified dollar amount, a specified percentage of the account balance, or a fraction/percentage of the marital share defined as of a certain date.  In addition, the non-participant spouse may be entitled to a portion of other economic improvements on the participant’s benefit, depending upon the features of the particular plan and what is ordered by the Court or agreed upon by the parties.

In the course of negotiating a settlement or preparing for trial, one issue to be considered is whether the non-participant spouse will request interest, gains, and losses on his or her award.  If the non-participant spouse is awarded or given interest, gains, and losses, his or her awarded portion will be increased (or reduced, as the case may be), depending upon the market, from the date of the award (usually the date of separation) to the date the Administrator of the Plan distributes the award to the non-participant (i.e., typically by establishing a separate account for the non-participant).  If the non-participant spouse is not awarded or given interest, gains, and losses, he or she will only receive his or her awarded portion.  Obviously, whether a non-participant chooses to ask for interest, gains, and losses will depend upon the then-current posture of the market, and may represent a gamble since there is often a substantial delay between when the Court makes its equitable distribution award (or the parties sign a Settlement Agreement) and the administration of the QDRO (and, therefore, the division of the retirement benefits).   

One category of assets that causes much confusion for clients in the context of dividing property and debts in a divorce action is retirement benefits.  The term “retirement benefits” includes defined contribution plans such as 401(k) plans and profit sharing plans, as well as defined benefit plans such as pensions. 

Section 20-107.3(G) of the Code of Virginia addresses how these benefits are to be divided: “Upon consideration of the factors set forth in subsection E, the court may direct payment of a percentage of the marital share of any pension, profit-sharing or deferred compensation plan or retirement benefits, whether vested or nonvested, which constitutes marital property and whether payable in a lump sum or over a period of time. The court may order direct payment of such percentage of the marital share by direct assignment to a party from the employer trustee, plan administrator or other holder of the benefits. However, the court shall only direct that payment be made as such benefits are payable. No such payment shall exceed 50 percent of the marital share of the cash benefits actually received by the party against whom such award is made. ‘Marital share’ means that portion of the total interest, the right to which was earned during the marriage and before the last separation of the parties, if at such time or thereafter at least one of the parties intended that the separation be permanent.”

But, not all retirement benefits are created equal.  For instance, although most types of retirement benefits are divided using a court Order called a Qualified Domestic Relations Order (“QDRO”), the content of those QDROs differs for defined contribution plans and for defined benefit plans when the owner of the retirement benefit is (or was) an employee of a private company.  On the other hand, the retirement benefits of federal employees are divided by a court Order called a Court Order Acceptable for Processing (“COAP”).  The retirement benefits of military personnel (retired or active duty) are divided by a different type of Order.  Over the course of the next few posts, I hope to shed some light on this very complicated area of divorce law.

As a domestic attorney, I hear many different stories as to why individuals make their way to my office and, eventually, end up pursuing a divorce.  From family to family, the details differ, but I have reached the conclusion that most divorcing people have experienced a disconnect with their spouse in at least one of four main areas (in no particular order): how to manage money, how to raise their children, how to interact with their respective extended families, and their intimate relationship.  At this time of year, when many are thinking about how to improve during the new year, this seems to be an important observation.  If more couples acknowledged that these four areas were potential areas of discord and made a conscious effort to be proactive with regard to them, I am almost certain that I would be out of a job.

I have to admit that, even after years of being a domestic attorney, it still surprises me when a potential client who has been married for a number of years tells me that he or she has a fundamentally different philosophy with regard to one of these issues than his or her spouse and that this is why they need to be divorced.  For instance, a few days ago, during an initial consult, a female potential client told me that she could not stay married to her husband because he did not want any children and she very much did.  During the consult, I wondered to myself: “Why didn’t you and your then-fiancé talk about this before you married?”  It seems to me that, if she was determined to have children and her soon-to-be husband clearly did not want them, this difference of opinion would be a deal breaker.  But, many either do not think, or chose not, to have these conversations in advance of getting married.  And sometimes people do have these conversations before the wedding, realizing that there may be divergent opinions, but, for various reasons, still proceed with the wedding.

In the end, I think the message is clear: a successful couple will have these conversations before they marry and will make sure they are on the same page; then, they will continue to revisit these issues periodically throughout their marriage to stay that way.  However, this is not to say that it is too late for those who are already married.  If my years as a divorce attorney have taught me anything it is that open communication is the key to any relationship.  I truly believe that many issues can be overcome if they are identified as issues early on, and if a couple then makes an honest commitment to work through them.

At the completion of my document signing meetings for my estate planning clients, many have questions about what to do with their newly-executed documents.  As a result, I spend a good amount of time at the conclusion of these meetings educating my clients about their estate planning “next steps.”   Until recently, I always reminded these clients to provide a copy of their Advance Medical Directive (“AMD”) to the person they named as agent, as well as to their doctor.  I also encouraged them to bring a copy of their AMD with them to any hospitals they checked into and to keep a copy in their carry-on bag when traveling.   All of these reminders were necessary because, until recently, there was no centralized place for my clients to “store” their executed AMDs so that they were reasonably accessible to those who needed to see them.  

In 2008, the Virginia General Assembly passed legislation to create a secure online central registry for advance health care directives.  Over the course of the last four years, however, this registry seemed to be more of an aspiration than a reality. That was until December 7, 2011. 

On December 7, 2011, the Virginia Department of Health launched its Advance Health Care Directive Registry (the “Registry”).  A public-private partnership between the Commonwealth of Virginia, UNIVAL Inc., and Microsoft, the Registry will allow individuals to store their advance medical directives, health care powers of attorney, and organ donation information, among other things, securely online at no cost to the individual.  From what I have read over the last few weeks, those who sign up for the registry will be provided with an identification card with their personal registry information, and will be able to share access to their information with anyone they designate.    

The web address for the Registry is www.virginiaregistry.org.  I intend to try to register my own AMD shortly and will report back in another blog post in the near future.

The holiday season is perhaps the most difficult time of year for clients going through a divorce (or even those who have previously gone through one), especially if the client has a minor child or children.   Like clockwork, as the major holidays come and go, so too does the barrage of phone calls to my office regarding the holiday visitation schedule.  During this sometimes already stressful time of year, disputes over the holiday visitation schedule are often what put domestic clients over the edge.

So what can a domestic client do to lessen the stress associated with the holiday season (at least from the perspective of the holiday schedule)?  Here are a few tried and true suggestions: 

1.         Negotiate a thorough, detailed schedule at the beginning.  Often, clients are in a rush to negotiate and sign their Settlement Agreement or initial Court Order, and, in so doing, they skim over important details such as what time holiday exchanges are to occur or where holiday exchanges should take place.  Some clients are so eager to complete these documents (or are so convinced that they will maintain a good “working” relationship with their soon-to-be-ex) that they resort to the almost always fatal “the parties shall equally divide the holidays on an annual basis pursuant to a mutually agreeable schedule” (or some variation thereof).   While I have had clients who are able to work out the schedule by themselves year after year, unfortunately, most parents are not able to do this.  As a result, from my perspective, it is almost always advisable for a client to start out with a detailed, default schedule that the parties can then agree to vary from, rather than to agree to a loosey-goosey schedule (or none at all).      

2.         Discuss annual holiday plans early and often and put any deviations in writing.  If you are one of those clients who have the “divide the holidays as the parties mutually agree” language, or if you and the other parent simply wish to deviate from your written schedule, the most important things to do are to start discussing the holiday schedule early and to put any deviations in writing.  By commencing the “negotiations” early, any disagreements are more likely to be worked out before the holiday actually arrives.  Further, putting the outcome of any discussions in writing (email is really great for this!) reduces the likelihood that you’ll drive to Virginia Center Commons at 5:00 p.m. on Christmas Day to exchange little Johnny only to be met by an empty parking lot.

3.         If the schedule truly isn’t working, take legal steps to have it changed.  If, each year, the schedule in your existing Settlement Agreement or Court Order causes screaming and/or crying, it may be time to meet with a domestic attorney to investigate having the schedule modified.  After all, your children (and you) deserve to have happy holidays!    

As a lawyer who practices in both the areas of domestic relations and estate planning, I can’t help but think about the interplay between the two.

Recently, I had a potential client who came into the office wanting to divorce her husband, but not wanting to do without his money.   She relayed to me that, several years before she and her husband had started having marital problems, her husband had executed a Durable General Power of Attorney in favor of her (i.e., her husband had executed a document which gave her the almost unfettered ability to transact on his finances).  This potential client wanted to know if she could go down to the local bank and use the Power of Attorney to withdraw all of her husband’s money (which was held in accounts that did not have her name on them) and what implications, if any, there could  be if she later chose to file for divorce.  

While this woman was not yet a party to a divorce action, her situation gives rise to an important point relating to the intersection between domestic relations and estate planning: you must always trust the person whom you have named as your agent under a Durable General Power of Attorney and, if and when that trust ends, you need to remember to revoke your Power of Attorney.  Revocation may be as simple as tearing up the Power of Attorney.

Nowhere is it more important for a person to revoke his or her Durable General Power of Attorney than in the context of a separation.  Section 26-81 of the Code of Virginia provides that an agent’s authority under a Power of Attorney terminates when an action for divorce or annulment of the agent’s marriage to the principal (i.e., the person who executed the Power of Attorney) is filed or in the parties’ legal separation, but it does not protect two parties before a Settlement Agreement is signed.  As a result, if your family circumstances are bad enough that you are visiting a lawyer to obtain information and guidance about a separation or divorce, you  may want to strongly consider revoking your Power of Attorney as soon as possible to avoid any further difficulties.

Technology can be wonderful.  New inventions often make our lives easier or more entertaining (or both).  Technology, however, can have negative attributes as well.  As members of our current society, we must educate ourselves equally on the benefits and pitfalls of the newest devices and trends.

Nowhere is this clearer than in the context of family law, especially with regard to divorce and custody proceedings.  In today’s technology-laden world, there have been a number of inventions (e.g., email, text messaging, EZPass, Facebook) that have unintentionally come to the aid of the average person going thru a divorce (as well as his or her often reluctant attorney).  There have also been a number of inventions that have served to “put the nail in the coffin.”  Indeed, depending upon whether you are the plaintiff or the defendant in a divorce action, technology may be a blessing or a curse.

One piece of technology that has very recently caused a lot of buzz in the divorce world is the “Find My Friends” application on the new iPhone 4S.  “Find My Friends” was intended to allow its user to track the location of those friends who have agreed to allow the user access to this information.  However, according to recent Internet chatter, “Find My Friends” also allowed a husband who suspected his wife of cheating on him to surreptitiously “verify” that she was engaging in an inappropriate relationship, or at least lying to him about where she was going from time to time.  He gave her a new cell phone with the application already loaded on it (and enabled).  When the wife left the house, the husband was able to track her location, unbeknownst to his spouse.  Now, he has screen shots which, apparently, he will attempt to use in Court to corroborate her visits with an alleged paramour.  The husband was so pleased with his “success” with the application that he posted what happened on a blog and thanked iPhone and “Find My Friends.”

While I suspect there might be issues with the admissibility of the husband's "evidence" (and maybe even potential criminal implications for his own behavior), I think at least one message is clear: educated use of technology is a must.  After all, one may not want others, including a divorce court or, better yet, the entire world, to find his or her friends.