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What is a Qualified Domestic Relations Order? | Domestic Relations Order

You may know that assets have to be split up during a Texas divorce, as this is a common point of contention in these cases, with both parties trying to get what they believe to be a fair split. While the most common assets considered are bank accounts, homes and cars, it’s very important to remember that retirement accounts may matter as well.

If you hold a retirement account, the court may rule that you and your spouse both get some of this money since it was wealth you accumulated while you were married. Depending on the type of account, it may pay out on a regular basis in the future, or you may be able to withdraw from it as you see fit.

This is where a Qualified Domestic Relations Order, or QDRO, comes into the picture. This is an official court order and it lays out the ground rules for how the account will be used going forward and how the wealth can be split up.

Most of the time, the QDRO just tells the administrator of the plan how to give out the money, with a focus on distribution that is similar to what you would have seen if you’d remained married. In this fashion, both parties can be confident that they’ll get the money they expect, when they expect it, and neither party can go against the order.

On top of that, if one of you gets married again in the future, the QDRO can say exactly how this should impact the plan and the payments.

With a high asset divorce, it’s very important to know about all of the court orders and legal documents that can be used to ensure that the separation goes smoothly from a financial perspective.

Source: United States Department of Labor, “Frequently Asked Questions Qualified Domestic Relations Orders,” accessed May. 08, 2015

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