Imagine you’ve just wrapped up a divorce case and the court awarded you 45% of your retired ex-spouse’s pension plan. You would think that you can then rely on getting a specific amount of money, 45% of the monthly pension payment your partner has earned, and there’s no way you’ll be getting less than that. Well, not necessarily. That’s what the Court of Appeals addressed recently in the case of Pederson v. Pederson, Record No. 1178-15-4 (Va. Ct. App. 2016).
The background of the Pederson case is messy, even for a divorce case. Mr. Pederson had served in the Air Force for 24 years and retired after the divorce case was started. Shortly after retiring, he suffered an incapacitating cerebral aneurysm, rendering him unresponsive. As part of equitable distribution, the court awarded Ms. Pederson 45% of her husband’s Air Force pension. But one of the options with an Air Force pension is that the participant, should they qualify, can take a disability benefit before they qualify for retirement payments, though doing so would diminish their later pension payment. This means that Mr. Pederson, or, realistically, his court appointed guardians, could take a disability benefit, which would reduce the amount of money Ms. Pederson would get from Mr. Pederson’s pension. A court can include language to protect against this, but the Qualified Domestic Relations Order (“QDRO”) that the court entered for Mr. Pederson’s Air Force pension had no such protections. Ms. Pederson appealed, claiming that this infringed on her vested right to a portion of the Air Force pension. Specifically, she argued that the QDRO should have included language ordering Mr. Pederson to not take disability benefits.
The Court of Appeals decided that no, the court did not have to include any protections for Ms. Pederson’s share of the pension. The court had no authority to order Mr. Pederson to not take disability benefits. The pensions, and the rights of the pensioners, are established by Federal law and states have no authority to order pensioners to waive any of those rights. So the most a court could do is include language in the QDRO ordering Mr. Pederson to compensate Ms. Pederson for any money she loses from him taking disability benefits. But while the court can include that language in the QDRO, that doesn’t mean that the court must include that language. There is nothing in Virginia law which requires that kind of language, and the court was well within its powers to enter a QDRO that does not include language preemptively addressing a situation which may or may not actually occur. Ms. Pederson is left with reactive remedies, where she can bring a show cause order should Mr. Pederson act in a way that interferes with her vested rights under the court’s equitable distribution order. But there was nothing which requires the court to protect her against that possibility preemptively.
The lesson to take from this is to be careful when drafting QDROs. In this case, the parties agreed to retain a third party attorney to draft the military benefit QDROs. The opinion says this third party attorney prepared the QDRO based on representations made in court. There’s no evidence in the opinion that any kind of desire to include this kind of protective language was communicated to the third party attorney. The result was a QDRO that left Ms. Pederson exposed to the risk of seeing her share of the Air Force pension diminished.
If you need any help with QDRO preparation, equitable distribution, or any other family law matters in the Northern Virginia area, please feel free to contact us at (703) 359-0088 or at info@SAlawfirm.com.