Thursday, June 21, 2012


FYI-Flint Divorce Bankruptcy Attorney Terry R. Bankert 235-1970,  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 App. 1/26/12) (unpublished).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.

Business Valuation in Divorce.

FYI-Flint Divorce Bankruptcy Attorney Terry R. Bankert 235-1970,  asks DID YOU KNOW?.From Creative Tax and Financial Tips for the Low Asset/Underwater Case By Mary V. Ade, Stout Risius Ross, Southfieldningham JD CPA PC Troy

Closely Held Businesses at the Low Point
A. Business Valuation Issues

  1. Quantifying RiskEvery company is susceptible to two types of risk. These two types are systematic risk (or market risk) and non-systematic risk (or company, industry specific risk). The volatility observed in the market as a whole over the past few years has created a need to diligently separate these risksPut another way, every company is susceptible to market risk, but some are more susceptible than others. For example, the “mom and pop” hardware down the street and Home Depot are certainly both susceptible to the risk associated with the economy as a whole. However, it is easy to see how the “mom and pop” hardware is affected to a different extent.Additionally, the current economic environment has created an environment in which it is increasingly hard to identify company specific risks. Every business owner has a different story about how the recession affected their particular company.
    • Every business owner has a story to support why the year of their divorce will be the worst year in the company’s history. Now, due to the uncertain economy, some of the stories are more believable.
    • This stresses the importance of doing your “due diligence”, to separate the true from the alleged. The fact that many businesses are struggling does not strictly imply that every business is doing poorly.