{"id":1171,"date":"2019-08-20T12:50:59","date_gmt":"2019-08-20T12:50:59","guid":{"rendered":"https:\/\/eralawgroup.com\/?p=1171"},"modified":"2019-08-20T12:51:01","modified_gmt":"2019-08-20T12:51:01","slug":"utilizing-in-marriage-qdros-for-estate-planning","status":"publish","type":"post","link":"https:\/\/eralawgroup.com\/utilizing-in-marriage-qdros-for-estate-planning\/","title":{"rendered":"Utilizing In-Marriage QDRO\u2019s for Estate Planning"},"content":{"rendered":"\n

By Jessica L. Estes<\/em><\/p>\n\n\n\n

As an estate planning and elder\nlaw attorney, often the most difficult type of asset to deal with is a\nretirement account.  Not only must you\nconsider the type of account it is, but you must understand the owner\u2019s rights\nto the funds in the account, as well as the consequences, tax or otherwise, of\naccessing those funds, which can depend on age and\/or other factors.  In Maryland, retirement accounts are\ncountable assets for Medicaid purposes, which adds another layer of\ncomplication.  And, even something as\nsimple as naming a beneficiary for the retirement account is not as simple as\nit may seem, especially if asset protection is your main goal.<\/p>\n\n\n\n

There are many reasons why\nsomeone may need to access retirement benefits. \nPerhaps one\u2019s spouse is in a nursing home and has a substantial\nretirement account that will have to be \u201cspent-down\u201d before qualifying for\nMedicaid, but the family wants to preserve those monies for the spouse at home,\nwithout suffering a huge tax consequence. \nOr, perhaps one spouse is older than the other spouse and wants to delay\ntaking required minimum distributions (\u201cRMD\u2019s\u201d), as the couple does not need\nthe extra income and wants to avoid additional taxes.  <\/p>\n\n\n\n

Many people may have heard the\nterm Qualified Domestic Relations Order (\u201cQDRO\u201d), but only in context to a\ndivorce, and very few understand what a QDRO really is.  Simply put, a QDRO is an order signed by an\nappropriate state court judge that: (1) recognizes the joint marital ownership\ninterest in a retirement plan; (2) provides for the plan benefits between the\nparties \u2013 the plan participant (employee spouse) and the alternate payee\n(non-employee spouse); and (3) is approved, or qualified, by the retirement plan\nadministrator. Unlike a QDRO in a divorce that transfers retirement benefits to\nan ex-spouse, an \u201cin-marriage QDRO\u201d transfers retirement benefits to a current\nspouse.<\/p>\n\n\n\n

To be eligible for an\nin-marriage QDRO, the retirement account must be an Employee Retirement Income\nSecurity Act (\u201cERISA\u201d) based plan, certain state pension plans, or a Federal\nThrift Savings Plan.  ERISA-based plans\ninclude 401k, 401(a), 403(b), corporate pension plans, some employee stock\nownership plans, profit sharing plans, and State deferred compensation 457\nplans.  Plans that are not eligible for\nan in-marriage QDRO include military pensions, Federal pensions (FERS and\nCSRS), railroad retirement plans and privately sponsored non-qualified stock plans.  Although individual retirement accounts\n(IRA\u2019s) and simplified employee pension plans (SEP\u2019s) are not immediately\neligible, if a limited liability company (\u201cLLC\u201d) was established with a solo\n401k, the funds in the IRA or SEP could be transferred to the solo 401k and\nthen qualify for the in-marriage QDRO.<\/p>\n\n\n\n

If eligible for an in-marriage\nQDRO, a review of the plan documents is necessary to verify the amount that may\nbe transferred, as well as the amount that should be transferred based on the\nfamily\u2019s needs.  Similarly, an\ninter-spousal agreement must be drafted that is the basis for the justification\nof the in-marriage QDRO. The inter-spousal agreement should lay out the\nagreement between the spouses as to the division of the retirement funds.  Using the example of the couple wanting to\ndelay RMD\u2019s, the agreement may state that all the retirement account will be\ntransferred to the younger spouse which would allow the funds to remain in the\naccount until the younger spouse reaches age 70 \u00bd.  Or, in the case of the couple wanting to\nqualify for Medicaid benefits, rather than \u201cspend-down\u201d the funds and pay taxes\non that money, the retirement funds of the nursing home spouse would be\ntransferred to the spouse still residing at home, which could avoid most, if\nnot all, of the tax consequences and preserve the asset for the community\nspouse, while allowing the nursing home spouse to qualify for Medicaid\nbenefits.  <\/p>\n\n\n\n

As you can see, in-marriage QDRO\u2019s can be useful tools for estate\nplanning but require careful drafting and knowledge of the various federal and\nstate laws.  Do not attempt this on your\nown;  contact a qualified attorney to assist\nand help you navigate these complicated rules.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Jessica L. Estes As an estate planning and elder law attorney, often the most difficult type of asset to deal with is a retirement account.  Not only must you consider the type of account it is, but you must understand the owner\u2019s rights to the funds in the account, as well as the consequences,Read More<\/a><\/span><\/p>\n","protected":false},"author":2,"featured_media":1172,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[196,767,127,189,766,46,201,768,712,155,47,48],"class_list":{"0":"post-1171","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uncategorized","8":"tag-annapolis","9":"tag-erisa-based-plans","10":"tag-estate-planning","11":"tag-estate-planning-lawyers","12":"tag-in-marriage-qdro","13":"tag-ira","14":"tag-maryland","15":"tag-maryland-attorneys","16":"tag-maryland-lawyer","17":"tag-medicaid","18":"tag-qdro","19":"tag-retirement","20":"entry"},"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/eralawgroup.com\/wp-json\/wp\/v2\/posts\/1171"}],"collection":[{"href":"https:\/\/eralawgroup.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/eralawgroup.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/eralawgroup.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/eralawgroup.com\/wp-json\/wp\/v2\/comments?post=1171"}],"version-history":[{"count":1,"href":"https:\/\/eralawgroup.com\/wp-json\/wp\/v2\/posts\/1171\/revisions"}],"predecessor-version":[{"id":1173,"href":"https:\/\/eralawgroup.com\/wp-json\/wp\/v2\/posts\/1171\/revisions\/1173"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/eralawgroup.com\/wp-json\/wp\/v2\/media\/1172"}],"wp:attachment":[{"href":"https:\/\/eralawgroup.com\/wp-json\/wp\/v2\/media?parent=1171"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/eralawgroup.com\/wp-json\/wp\/v2\/categories?post=1171"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/eralawgroup.com\/wp-json\/wp\/v2\/tags?post=1171"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}