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Perhaps, the most effective tool to compel compliance with
the terms of a Property Settlement Agreement or a court
imposed settlement that is in arrears attributable to
alimony or child support is a Qualified Domestic Relations
Order.
Post-divorce events often result in non-compliance with the
terms of a Property Settlement Agreement and or Final
Judgment of Divorce. This generally occurs when a
titled-spouse or his or her new mate deems such obligations
burdensome. When conditions are favorable such obligated
spouse is likely to unilaterally halt or reduce payment of
court ordered obligations. This is especially true when the
obligated spouse moves to another jurisdiction or leaves the
country. The spouse suffering from such defaults is
frequently without sufficient funds to obtain effective
remediation of the defaults. The aim of this Practice Aid is
to make clear that a swift, cost effective remedy exists.
Moreover, the defaulting spouse pays the reasonable remedial
legal fees of the injured spouse. Before going further, go
to our website and read the Practice Aid titled "Attorney
Fees". Upon reading the recommended Practice Aid, an
attorney should be clear that his or her efforts can be
compensated as part of the obligations imposed by the court
in a Qualified Domestic Relations Order.
As time passes and the remedial efforts of a Former Spouse
are limited to phone calls, letters and pleas, a
titled-spouse comes to believe that his or her economically
disadvantaged Former Spouse is not financially able to
pursue an effective legal remedy. This view serves to
intensify the arrogance of the titled-spouse. Overtime the
magnitude of alimony and or child support arrearages can be
very substantial. Further enhancing the disdain of the
titled-spouse is the view that removal from the jurisdiction
in which the divorce took place or better yet relocation in
a foreign country further insulates him or her from a
serious challenge to this spouse's clear and continuing
disregard of the terms of divorce. Note; the observations
made herein hold regardless of the domicile of the
titled-spouse. What controls is the fact that his or her
pension is paid by a U.S. corporation subject to ERISA.
The view held by the titled-spouse that an economically
disadvantaged spouse is without legal recourse is at
variance with reality provided this titled-spouse's pension
is in either the accumulation stage (active plan
participant) or in the retired and collecting stage of his
or her pension. These pension assets of the titled-spouse
represent the source of the remedy for default. A
titled-spouse's pension(s) remain subject to Qualified
Domestic Relations Orders designed to cure alimony and or
child support arrearages (including imputed interest). Such
Orders can be periodical. Thus your initial remedial
Qualified Domestic Relations Order can be supplemented as
required until the entire pension asset becomes the property
of the injured spouse. The practitioner is reminded that
regarding ERISA pensions there is no bar to an award of 100%
of the pension to an Alternate Payee.
The mechanics of the remedy are a function of the status of
the titled-spouse's pension at the time your action is
commenced. If the titled-spouse is an active participant in
a retirement program then the attorney is likely to focus on
his or her Qualified Defined Contribution Plan*. This plan
may have immediately distributable assets. If the
titled-spouse is retired and collecting a pension the
mechanics are different. Then the target of your remedial
action is more likely to be a Qualified Defined Benefit
Plan. However, if this individual upon retirement had both a
Qualified Defined Contribution Plan and a Qualified Defined
Benefit Plan it is possible that the assets of the Qualified
Defined Contribution Plan were "rolled over" into an
Individual Retirement Account (IRA). Then the initial effort
of the attorney will be directed to a 26 U.S.C 408(d)(6)
transfer of assets from the IRA directly to your client.
This distribution to your client from the Individual
Retirement Account may take the following forms:
Roll over of all but the sum due to the attorney for legal
fees
A single sum paid directly to your client and fully taxable.
Do not assume that a pension(s) acquired subsequent to
divorce is immune from use of this remedy. It is Troyan,
Inc.'s view that post-divorce pension plans are a proper
target of this remedy, provided your Qualified Domestic
Relations Order is incident to default(s) of the Property
Settlement Agreement and or Final Judgment of Divorce.
Troyan, Inc. is prepared to reduce your client's accumulated
arrearages to a single sum or an actuarially equivalent
monthly benefit. Then, we suggest a drafting methodology
that satisfies the arrearage plus attorney fees. The end
product of our effort will be a Qualified Domestic Relations
Order(s) ready for execution by a court in your
jurisdiction.
* For clarification of terms used in this Practice Aid,
please reference "Glossary" at Troyaninc.com.
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