Yale-New Haven Hosp. v. Nicholls: Qualified Domestic Relations Orders (QDROs)

Posted by Steven D. Eversole | Jun 13, 2015 | 0 Comments

These days, we see many commercials on television and on the Internet for so-called legal “self-help” services. This is where you pay hundreds of dollars to an online company, and they help you prepare legal documents while telling you they are not performing a legal service and are not responsible for anything that happens.

While this was traditionally done with corporate formation documents and drafting of last wills and testaments, you can now go online and pay one of these companies to complete your divorce petition.

Taxes

First, our Birmingham divorce attorneys urge you not to do this. Aside from the questionable nature of the services themselves, you can be left with serious problems, and no call to customer service is going to offer much help. Any money you spend on hiring a competent and experienced family law attorney can end up saving much more in the long run, because you know someone is actually there to help you during the process and will not walk away at the first sign of trouble.

One of the areas where it is especially important to speak with an experienced divorce attorney is if either spouse has an IRA, federal pension, federal thrift savings plan, or other similar retirement benefits package. These are part of the marital estate, and the companies will not transfer properties without a Qualified Domestic Relations Order (QDRO) signed by a judge. These are highly technical documents, and failing to complete one properly can cost the parties a lot of money and lead to a lot of trouble with the IRS.

In a recent appeal from the United States Court of Appeals captioned Yale-New Haven Hosp. v. Nicholls, QDRO issues were at the heart of the problem. In this case, both parties had made competing claims to proceeds from an Employment Retirement Income Security Account (ERISA) regulated account, and the hospital administrating the account was caught in the middle of the legal battle and filed an action for impleader to join the litigation as a party.

One of the parties was decedent's former spouse, and the other was his current spouse at the time of death. The money in question was part of an ERISA retirement account and pension. As discussed above, handling QDRO issues during a divorce proceeding can help avoid costly and extensive litigation later.

The trial court granted a motion for summary judgment on grounds that the divorce property settlement agreement was sufficient to constitute a valid QDRO, as it containing the necessary elements. However, the appealing party claimed it did not constitute a QDRO, because it was not a separate document, and it does not contain the required technical langue pursuant to federal regulatory requirements.

Ultimately, the court concluded it did, in part, satisfy the requirements of a QDRO, but it also failed, in part, to include all of the necessary provisions required in a valid QDRO. For this reason, the trial court's decision to grant the motion for summary judgment was affirmed in part and reversed in part for further litigation consistent with their opinion.

Additional Resources:

Yale-New Haven Hosp. v. Nicholls, June 4, 2015, United States Court of Appeals for the Second Circuit

About the Author

Steven D. Eversole

J.D., Samford University's Cumberland School of Law, Birmingham, Alabama B.A., University of Alabama, Tuscaloosa, Alabama

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