Most people who have gone through a divorce, know that QDRO’s (qualified domestic relations orders) can be used to divide specific retirement assets between spouses in a divorce. But few people know that QDRO’s can also be used to address unpaid court ordered child support, alimony arrears, unpaid unreimbursed healthcare costs, unpaid college contributions and the legal fees associated with those collection efforts.
Everyone knows someone who has a terrible story about an ex, who simply refuses to comply with the agreement for the payment of child support, alimony and a million other expenses to be shared between parties after a divorce for the support of their children. Worse, we have all heard the stories of those who not only refuse to pay what they owe but refuse to comply with the orders entered by the court directing them to pay for the arrears outstanding for those support obligations.
In these “bad” settings, despite all efforts, the ex simply refuses to pay their obligations for child support, alimony, college costs, etcetera and no matter what is done, the result remains the same and the money owed remains unpaid. Excluding drastic measures taken by the court, it seems as if there is no mechanism in place to address the issue of unpaid child support, unpaid alimony, college costs, and unreimbursed health care from a recalcitrant “nogoodnik”, until now.
A recent New Jersey Appellate Division decision has approved the actions of the lower court, where it authorized the former spouse to use a QDRO to invade the non-compliant spouse’s retirement assets to satisfy unpaid child support, unpaid alimony, college costs and the legal fees incurred to collect the same. The decision in Orlowski v. Orlowski, 2019 N.J. Super. LEXIS 62 (App. Div. 2019) suggests that QDROs may be used as a tool for collection of unpaid court ordered support ( and related expenses) to invade a former spouse’s ERISA-protected retirement assets (i.e. Pensions and Annuities) for unpaid alimony, unpaid child support, college costs, unreimbursed health care costs and the orders for legal fees connected to those collection efforts. Orlowski also lays out the roadmap for how to properly use a QDRO for this type of collection effort.
By way of background, in Orlowski, the former husband refused to pay his alimony, child support and his share of their children’s college costs despite having the financial ability to do so and despite repeated court orders requiring him to do so. To compound matters, Mr. Orlowski also undertook extraordinary efforts to intentionally shield his income and non-retirement asset structure from creditors, including shielding his assets from the court orders obtained by his former wife for non-payment of his support obligation (through the creation of a trust). Ultimately, the court determined that absent extraordinary action, any efforts by the former wife to obtain compliance with the court orders would be meaningless.
Recognizing just how shady the former husbands actions were and that he had no intention of complying with its orders, the court then authorized the invasion of his retirement assets by QDRO to address payment of its outstanding orders for unpaid child support, unpaid alimony, the former husband’s unpaid share of the children’s college costs and the orders for legal fees associated with the former wife’s efforts to collect these monies.
In providing assistance to the former wife, the appellate court explained why the use of a QDRO for the payment of fees was disapproved in the 1999 appellate division decision of Johnson v. Johnson, 320 N.J. Super. 371 (App. Div. 1999) and provided a clear roadmap for litigants to use to get a QDRO in the future.
To get a QDRO for the payment of outstanding unpaid court ordered support and related expenses from the other spouse’s retirement assets, the QDRO must meet three specific requirements:
(1) the QDRO can only be in favor of the former spouse or the child of the recalcitrant nogoodnik (identified as the “alternate payee”). Translated – in Johnson, the QDRO was in favor of the lawyers for payment of their fees. Yet, under federal law, a QDRO can only be in favor a proper alternate payee and a proper alternate payee under federal law is the former spouse or their child;
(2) the QDRO can only address unpaid child support, unpaid alimony, unpaid college contribution, unreimbursed healthcare costs, and related expense items for the support of the children set forth in court orders and for legal fees connected to those collection efforts also set forth in court orders. Translated – you must have a court order spelling out what amount is owed for child support, alimony, etc. The court cannot simply give a litigant a QDRO for invasion of the former spouse’s retirement asset without a prior order for the obligation and proof that extraordinary measures need to be taken about the party since ordinary measures for compliance have not worked; and
(3) the QDRO cannot require the retirement plan to create a benefit not presently available through the plan. Translated – you can’t ask the court to require the retirement plan to give you a specific payment from the plan unless the plan permits it to occur. As an example, if the plan says that no participant can receive his share of the retirement monies in the plan before reaching age 55 and the participant is 53 years old, you can’t make the plan pay out the money to you until the participant reaches 55 years of age.
If these three requirements are satisfied, it is now possible to use a QDRO to invade a recalcitrant spouse’s retirement assets for court ordered but unpaid child support, unpaid alimony, college contributions, unpaid healthcare costs, and related fees.