Qualified Domestic Relations Orders (QDROs) award retirement benefits to someone who is not the owner or payee of the plan. This person is called the alternate payee, and they are often spouses and ex-spouses. Retirement benefits can be considered marital property and divided in equitable distribution during divorce proceedings. However, since some divorces can take years to finalize, there are many considerations for property distribution, including the death of either spouse.
If an alternate payee spouse dies before a QDRO is entered, can their estate be awarded the benefits? The answer is complicated, but in the case of Eller v. Bolton III, the alternate payee’s estate was successful in its claim for benefits.
Eller v. Bolton III
Harold Eller and Virginia Eller were married in 1961 and separated in 1997. A consent order regarding the distribution of Husband’s profit-sharing plan was entered in June 2000. The order included the following terms:
- The plan administrator shall distribute 50% of the total value of the plan to Wife, but not exceeding half of $50,000
- Wife shall receive one-third of the pre-retirement death benefits, based on the benefit amount at the time of Husband’s death, but not exceeding one-third of $126,000
- Wife shall receive one-third of the proceeds of Husband’s life insurance benefits, based on the value of the benefit at the time of Husband’s death, but not exceeding one-third of $76,000
- Wife’s attorney is directed to draft the QDRO to distribute the pension benefits
The parties were divorced in 2001, and the consent order was incorporated but not merged in the divorce judgment. A QDRO was entered and submitted to the plan administrator, but changes were needed, and the parties agreed to amend the original QDRO to address the administrator’s concerns. The amended domestic relations order was never approved by the circuit court but was submitted to the plan administrator.
Death of Alternate Payee
Later in 2001, before Wife could receive the benefits from Husband’s plan, she died. Husband and Wife’s estate both filed claims when Husband became eligible for his plan benefits.
Husband claimed that Wife was not entitled to benefits under the original QDRO because payments to her were to stop upon her death. Wilbur Bolton, III, the personal representative of Wife’s estate, requested that the terms of the original QDRO be changed to reflect the terms in the consent order.
The District Court granted Husband’s motion, stating that the language of the original QDRO could not be ignored and that the rights to payment ended with Wife’s death. Therefore, the estate was not entitled to benefits under Husband’s plan. After this judgment was entered, the estate filed a motion to amend the original QDRO in circuit court, and the court approved an amended order in March 2004 making Wife the alternate payee of Husband’s plan through Bolton. Husband filed a motion and claimed that the circuit court made errors in its findings of fact and conclusions of law. This motion was denied, and Husband appealed.
The appellate court determined that the language of the consent order should be used instead of the language in the original QDRO. It further stated that, since the original QDRO failed to properly award Wife’s interest in Husband’s retirement benefits as intended by the parties prior to her death and the amended version was not qualifiable, an additional amendment could secure Wife’s portion of the benefits, even though she passed away. A family law attorney skilled in financial matters is essential for success in a property settlement. Contact Woodruff Family Law Group for help.