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Should you use a QDRO when getting divorced?

The assets that you own when you get divorced may feel easy to divide, especially if you're using mediation to reduce conflict and you have agreed to split your assets 50/50. If you have $100,000 in the bank, you both take home $50,000 and open your own accounts. If you sell the home and make another $200,000, that's $100,000 for each of you. You feel like you can run quickly down the list of assets and get this done.

But what about assets that you may not be using yet, but that you still own? For instance, what about your spouse's pension plan?

Say you are getting divorced at 50 years old. Your spouse doesn't plan to retire for more than a decade, but they still have a pension plan or a retirement fund they have been earning the entire time. That's still an asset. You may still need to divide it, even if you do not get that money yet.

To do it, you can use a QDRO, or a Qualified Domestic Relations Order. It sets an agreement in place to send a portion of the money to you once the pension plan begins to pay out. This protects your own ability to retire if you were also counting on that plan. You can divide your future assets during the divorce and rest assured that they'll come to you in time, or you can even set up a QDRO in the years after your divorce, if necessary.

Make sure you are well aware of the options you have when dividing assets so that you do not overlook anything.

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