Divorce: The Leaver and the Left

For the majority of couples who come apart or divorce, to say it is a ‘trying time’ is to put it mildly. There is a loss of the hopes and dreams that most of us have when we embark on such unions, compounded by the reality that has evolved.

 

When one partner/spouse is convinced that their relationship is no longer viable and needs to be out of it, the partner/spouse doesn’t have a choice. What’s important, for both, is to realize that they are not in sync with their thoughts and feelings. Each person needs to understand the other in order to be able to part in a respectful manner, particularly when there are children involved.

 

The ‘leaver’ has made the decision that it is necessary to come apart, most often after experiencing sadness, anger, hopelessness, etc. about their situation. Most people don’t elect to take such steps lightly or quickly. They mentally slog through the disagreements, disappointments, and considerable differences between them. Both adults go through the five stages akin to having and accepting a terminal illness:

 

  1. Denial…feeling this can’t be happening to us, it’s unreal.
  2. Depression…any changes in eating, sleeping, energy level.
  3. Anger…impatience and resentment of their partner and why can’t they change?
  4. Negotiation…acknowledging the need for change and how to achieve it.
  5. Acceptance…we will be coming apart.

 

The leaver needs to realize is that their partner, who may not feel the same way about their relationship [or may, but not conclude that coming apart is the best or only solution] has time to adjust and will need to go through the same stages. The stages are generally experienced in the order listed above although people often shift back and forward, particularly in the beginning phases. It helps when the leaver understands his/her partner/spouse’s need for going through that process and presents his/her wishes gently, clearly stating the reasons for the decision and then being patient for his/her partner to catch up or, at least, be accepting to come apart.  Doing this can facilitate a somewhat less emotional and more civil dissolution of the relationship or marriage, which is important to the couple and how they each move on but even so much more essential when there are children.

 

The person who doesn’t want to end the relationship, for a multitude of possible reasons, is thrust into the first phase listed above. “This can’t be happening!” “I knew we had problems but…not this!” “How can you do this to me (and the children)?” That partner/spouse usually experiences deep sadness once the reality settles in. Everyone’s coping mechanisms vary in how this and all of the phases present. Once anger is boils up in the left partner/spouse, he/she frequently resents that their partner/spouse is doing so well and this is “easy for them”, not realizing that the leaver has, most often, suffered through the same feelings before and is just ahead of them. If that can be sincerely explained it can ameliorate a negative reaction. When there isn’t counter blaming or accusations, there can be a less traumatic coming to terms with the situation and negotiating. Then, acceptance can progress.

 

When in a relationship, it is always beneficial to mentally step into the other person’s shoes to imagine how they think and feel rather than getting stuck in our own perspective of things. When a relationship not working or the relationship is ending, it’s even more vital.

 

by Sharon Klempner

#101 on Retirement Accounts and Deferred Compensation

Many divorcing couples are not aware that retirement and deferred compensation accounts, including IRAs, are subject to equitable distribution. Many individuals, who know that these accounts are ‘ in the pot’ to be divided, believe they have to withdraw the funds in order to transfer them – and thus pay significant penalties, taxes and interest. Thus, they think that getting their fair share is more work that it’s worth.

If you are in New Jersey, and believe either of the above, you are mistaken.

With some exceptions, in New Jersey, most assets acquired during the marriage are subject to Equitable Distribution, that is, to be divided upon divorce. This includes retirement and deferred compensation accounts, even though they are titled in the name of only one of the parties.

How does this work?

All contributions (whether by the individual or the employer) made during the marriage to pensions, 401Ks, IRAs, Deferred Compensation accounts, etc., are subject to be divided during a divorce. The percentage of the division and/or the amount you are to receive depends upon the specifics of your case.

What happens if the employee made contributions before the parties were married?

Does the employee get a credit? YES! There are specialists in this industry who use:

  • the date employment began
  • the date contributions commenced
  • the date of the marriage
  • the date of the complaint or other agreed upon cut-off date for equitable distribution

Specialists use the above information to determine the portion of the account that is pre-marital and what is in the marital pot to be divided. If your attorney specializes in family law, he/she should know qualified individuals who can make these calculations.

Some of you just read the term “cut-off” date and you’re thinking, What is that? In order for something to be in the pot, to be divided, it must have been acquired during the marriage. So the marriage, with some exceptions, is the date of the marriage until the date when one spouse files for divorce or some other cut-off date upon which the parties agree.

In addition to the specialists determining the value of the pension/deferred compensation plan, they also prepare documents known as Qualified Domestic Relations Orders (QDRO). The QDRO enables an employer to transfer a non-employee spouse’s share of the account into a separate account, without the parties having to incur taxes and/or penalties.

Note: Whenever you withdraw the money for your own use, you will have to pay the appropriate taxes, etc. A QDRO only eliminates the tax/penalty consequence for the initial transfer to the non-employee spouse pursuant to the final settlement.

It is important to learn about retirement/deferred compensation accounts during the discovery process and to obtain the appropriate documentation from an employer. Some of the documents needed include:

  • The most recent benefits statement
  • A copy of the plan
  • The date employment commenced
  • A sample QDRO or its guidelines

The reason to have a sample QDRO is that it may provide an example of what the plan does and doesn’t permit.

“It is critical to obtain all pension information during the divorce process,” states Judith Deer, Esq., President of All Pro QDRO, LLC. “So often in my practice I see parties attempting to gather information and resolve pension issues post-judgment, which is very difficult. The pensions are usually one of the parties’ largest assets and yet the least attention is paid. Be sure to thoroughly negotiate the pension benefits before the divorce is finalized.”

It also is critical to learn whether the plan permits survivor benefits. This is crucial if a person dies before the QDRO is prepared or before their benefit goes into effect. There is language that can be used to protect a non-employee spouse’s interest. This language should not only be in the QDRO but needs to be incorporated into the Property Settlement Agreement. The Settlement Agreement should have language that an employed spouse may not withdraw any funds or take any loans against the accounts until the QDRO is finalized and in place with an employer.

Additionally, a plan administrator needs to be notified as soon as possible when a QDRO will be needed so they do not place the account into payout status prior to the QDRO being instituted. Be aware that , legally, a plan does not have to put a hold on an account until there is a finalized QDRO signed by a judge, which is another good reason to get your pension benefits in order prior to finalizing your divorce.

Lorraine R. Breitman, Esq.