23 Jun Who gets this pension after a divorced person dies?
Q. I have a pension from work and the court decided during my divorce that my ex will get half. If he dies, are his new wife or their other kids — not our kids — entitled to his half or does it revert back to me?
A. Yours is an important question.
But the answer will depend largely on the language of your divorce decree and the language included in the Qualified Domestic Relations Order (QDRO), the document that facilitates the division of the pension.
If the court has determined that your ex-husband is to receive his one-half of your pension subsequent to divorce, it will most likely be necessary that a QDRO is, or was, prepared and served upon your pension plan administrator, said Jeralyn Lawrence, a family law attorney with Lawrence Law in Watchung.
She said the language of the QDRO is guided by the terms of your divorce decree and/or marital settlement agreement, which should indicate how retirement assets are to be distributed between divorcing spouses.
“Whether your ex-husband’s benefit would continue to his then-surviving spouse at the time of his passing, or his then-surviving children not born of your relationship with your ex-husband, is determined by the plan policies and procedures itself,” Lawrence said. “It would be important to know how your pension plan is held — privately, publicly, through the government or the military, etc. — and whether you were in pay status at the time of your divorce, or if you had yet to elect a form of benefit payment at that time.”
Generally, she said, if your pension was divided by way of QDRO resulting in your ex-husband receiving 50% of your pension, the QDRO will most likely have language describing whether his share goes back to you, passes to his estate or is forfeited to the pension plan. Your pension’s summary plan description might provide some additional helpful information to answer your question, Lawrence said.
She said there are two basic ways to divide a pension.
The first approach that is used in some QDROs is meant to “split” the actual benefit payments to a participant under the plan to give the alternate payee a portion of each payment, Lawrence said.
“This approach to dividing retirement benefits is often called the `shared payment’ approach wherein the alternate payee will not receive any payments unless the participant receives a payment or is already in pay status,” she said. “Therefore, this approach must be used when a participant is already in pay status.”
A QDRO under this approach must specify the amount or percentage of the participant’s benefit payments that is assigned to the alternate payee and must specify when the alternate payee’s right to share the payments commences and terminates, she said.
“If you were in pay status at the time of your divorce from your ex-husband, and you were receiving benefit payments as a single life annuity whereby payments would terminate at the time of your death, your ex-husband’s share would revert to either you or the plan when he predeceased you — unless the plan permitted him the right to transfer his benefit to a contingent alternate payee under the specific language of the QDRO,” Lawrence said.
Alternatively, QDROs that intend to divide a retirement benefit as part of the marital property upon divorce generally divide the participant’s retirement benefit — rather than just the payments — into two separate portions with the goal of giving the alternate payee a separate right to receive a portion of the retirement benefit to be paid at a time and in a form different from that chosen by the participant, Lawrence said.
“This approach to dividing a retirement benefit is often called the `separate interest’ approach,” she said. “This method is typically used when the QDRO is in place before the participant’s benefits are in pay status.”
A QDRO under this approach must specify the amount or percentage of the participant’s retirement benefit to be assigned to the alternate payee and the number of payments or period to which the benefit applies, she said.
If you were not in pay status at the time of your divorce and had not elected a form of benefit payment upon retirement, your ex-husband would have the ability to elect a form of benefit payment applicable to his share of the benefit, as permitted by the plan, she said.
Lawrence gave this example: If a plan offered you the option of receiving a “period certain annuity” which consists of monthly payments for a definite period of time, such as 15 years, your ex-husband would have also been permitted to elect a “period certain annuity” with respect to his share of benefits. If he were to pass away before the expiration of the guaranteed period, the plan would continue making payments to his designated beneficiary. In this sense, your ex-husband would enjoy rights similarly afforded to you, namely, the right to designate a third party to receive unpaid benefits upon his death. In this event, your ex-husband’s share may not revert to you, she said.
“It is important to notify your plan of your ex-spouse’s passing so that the plan may act accordingly,” Lawrence said. “In the event you are unable to get a copy of your QDRO or you do not recall whether a QDRO was entered, you should speak to the plan administrator or an experienced family lawyer who can attempt to get a copy for you.”
Email your questions to .
This story was originally published on June 23, 2021.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.