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QDRO Limits Wife's 'Survivor Benefits'

Where a qualified domestic relations order awards survivor benefits under a husband’s pension to his ex-wife, the benefits vest only if the husband dies after he has retired, the Court of Appeals of Virginia has ruled.

The QDRO at issue was modeled after the parties’ divorce decree, which provided that the wife would receive her share of the husband’s pension “as such is received by” the husband. On appeal, the wife contended that the trial judge who crafted the QDRO “impermissibly limited” the award of survivor benefits until after the husband had retired.

The case, says the attorney who represented the husband, is significant because the court has now answered the question of exactly when a former spouse can receive survivor benefits.

“It has given us a definition of survivor benefits and when they can be awarded,” said Joyce M. Henry-Schargorodski of Fairfax. “We’ve now defined survivor benefits as post-retirement survivor benefits.”

The case is Bradley v. Bradley (VLW 002-7-530). Senior Judge Nelson T. Overton wrote the six-page opinion for the court.

Game of survivor

The divorce decree for the husband and wife was entered on Jan. 7, 2000. Under the decree, 35 percent of the husband’s pension in the Oil, Chemical & Atomic International Union, known as the “OCAW pension,” was awarded to the wife. The husband took the remaining 65 percent.

About one year later, the court entered the QDRO. According to Overton, “The QRDO allows wife to receive only post-retirement survivor annuity benefits and does not allow her to receive pre-retirement benefits.” In addition, said Overton, the wife conceded that she didn’t bring up the issue of pre-retirement benefits at trial because she didn’t know such benefits were an option.

In her appeal, Overton said that the wife relied on the following language in the decree: “Wife shall have the option of receiving the OCAW defined benefit survivor benefit.” She said that the plain meaning of the language entitled her to pre-retirement benefits and, furthermore, that limiting the scope of the survivor benefits was not permissible.

The final decree said: “[W]ife shall receive 35 percent of the marital share of the husband’s OCAW gross defined benefit pension plan as such is received by the Defendant.”

Said Overton, “If wife were entitled to receive pre-retirement survivor benefits, she would receive that benefit before husband.”

What’s more, said Overton, Virginia Code Sect. 20-107.3(G)(1) “allows for payment to alternate payees only as such ‘benefits are payable’ and ‘actually received’ by the participant.”

“My sense of survivor benefits is what we understand survivor benefits to be — when the husband gets his pension and he dies in pay status, the wife gets the benefits,” Henry-Schargorodski said. “Essentially, she doesn’t receive it until he receives it.”

QDRO drafters, said Henry-Schargorodski, are now on notice when it comes to survivor benefits.

“The court has placed a limitation on it,” she said. “The limitation is when you say survivor benefits, you mean post-retirement survivor benefits.”

“I think that’s an overbroad interpretation,” said Catherine S. Croft of Manassas, the wife’s attorney. “I don’t think this case brought down a bright-line rule.”

Henry-Schargorodski cited other facts that supported her case on appeal.

“[The wife] admitted that she didn’t even know there was such a thing as pre-retirement survivor benefits,” she said. “The judge indicated that he didn’t contemplate pre-retirement survivor benefits in his ruling.”

“He didn’t say that at trial,” Croft said, “but he did say that at the QDRO hearing.”

In Croft’s view, the special circumstances of the case reduce the significance of Overton’s ruling.

“I think it’s limited to the facts of the case,” Croft said.

Not surprisingly, Henry-Schargorodski disagreed, contending that the court cleared up an important issue in the area of survivor benefits.

“I think it’s an important definition,” she said. “It’s an important thing for family-law attorneys who are drafting qualified domestic relations orders to understand.”

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