FYI-Flint Divorce Bankruptcy Attorney Terry R. Bankert 235-1970, www.attorneybankert.com asks DID YOU KNOW?.From Creative QDRO and EDRO Update By Nancy Keppelman, Stevenson Keppelman Associates, Ann Arbor.
Recent Cases in Michigan
Neville v Neville, No. 294461 (Mich. Ct. App. 2/16/12). A QDRO was entered in 1995 that gave the alternate payee a prospective coverture fraction share of the participant’s Ford General Retirement Plan benefit (50% of the “amount otherwise payable to the Participant” times 50% times years of service during the marriage divided by total years of service). The alternate payee was also to get pre- and post-retirement survivorship benefits. In 2009, the participant filed a motion to clarify and amend the QDRO, saying it gave the alternate payee more than she got in the judgment of divorce. The trial court entered an amended QDRO to correct perceived inconsistencies between the 1995 QDRO and the 1994 Judgment. The Court of Appeals reversed the lower court and vacated the amended QDRO on the grounds that the motion to amend the QDRO was untimely, and also finding that the QDRO, which was made a part of the Judgment, incorporated the terms of the agreement of the parties about the division of the pension, so that there was no inconsistency. The Court of Appeals relied on the provision of the Judgment which required that a QDRO be entered, and found that to the extent the terms of the Judgment might not completely resolve the terms of the division of the pension, the QDRO supplied those terms.
Roller v Roller, No. 300543 (Mich. Ct. App. 1/26/12) (unpublished). This case involved a dispute about the parenting time schedule and the interpretation of the Judgment of Divorce dividing a participant’s 401(k) account. The Judgment said that a QDRO would be entered that “will roll the balance” from the participant’s 401(k) plan “of approximately $44,000” to an IRA, and that the “approximately $44,000 balance represents what remains after the current loan of approximately $14,000 is paid-in-full from the approximately $58,000 that is currently in the plaintiff’s 401(k) account”. The participant argued that the alternate payee should get about $44,000, not the balance in the account after subtracting the unpaid loan balance. The Court of Appeals agreed with the trial court that the Judgment language was ambiguous, and interpreted the Judgment to mean that the alternate payee got 100% of the account balance after subtracting the outstanding loan balance. The Court held that the participant kept the outstanding loan and the obligation to repay it
Estate of Reed v Reed, No. 297528; 2011 Mich. App. LEXIS 1115 (Mich. Ct. App. 6/23/11). An ex-wife waived all rights to the husband’s retirement benefits, but the husband died before changing his designation of her as his beneficiary of the pension benefits. As required by the plan and ERISA, the plan paid the 401(k) account to the ex-wife after the participant’s death. The Court of Appeals held that, although the plan was required to pay the benefits to the ex-wife, because she had waived her rights to the benefits in the Judgment of Divorce, she was not entitled to keep the proceeds. This was true even though the Judgment was a default judgment. The Court required her to pay the plan benefits to the estate of the deceased husband.
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