Pension Division And The Complex Use Of The Cooper Formula
One of the most challenging issues in property division is what to do with pensions and other retirement benefits such as 401(k)s and other tax-deferred plans. After the home, pension plans often represent a family's most valuable asset. The value of pensions is usually impossible to calculate with certainty, as they represent the pensioner's right to draw payments in the future, when values are likely to be quite different.
The Qualified Domestic Relations Order (QDRO)
Unlike property division, which defines marital property as that acquired between the date of marriage and the date of separation, pensions are divided between date of marriage and date of divorce. Delaware divorce lawyers prepare qualified domestic relations order (QDRO), which uses a calculating tool called the Cooper Formula to ensure that the division represents the number of months the couple was married. (Government and military pensions require a different type of order.)
We recommend to clients that they have a QDRO drafted by their pension plan manager as soon after the divorce as possible. If accounts are not properly separated and distributed promptly, the value of the fund may be negatively affected. Tax benefits of the plans may also be lost, so action is very important.
Knowing What The Cooper Formula Is When It Comes To Pension Division
This is an advanced level of calculation that many firms are not comfortable taking part in. At Poole, Mensinger, Cutrona & Ellsworth-Aults, we create the QDRO and make an informal "guesstimate" so that clients understand what is in store for them — and leave the official calculation to the court.