The process of dividing marital wealth can be complicated for some Florida couples. Negotiations can go on for a lengthy period of time, and both parties are often overwhelmed by the number of decisions that must be made. One thing that spouses often overlook during property division is excess fees that can creep into the process. Being alert for those added expenses can make a difference in the ultimate bottom line.
One example lies in the fees associated with preparing a qualified domestic relations order, or QDRO. This is the document that outlines how the assets held in a 401(k) account are to be handled during a divorce. While some plans do not charge a fee for this service, others will tack on between $300 and $1,200 to prepare a QDRO.
Some financial experts argue that the cost of this service is reasonable. Others claim that there is no need to charge so much for preparing a QDRO, and assert that 401(k) plan administrators view these fees as little more than a chance to boost profits. To make matters worse, additional legal fees can be accumulated if there are errors in the QDRO and it requires alteration.
Florida spouses who are preparing to divorce should check with their 401(k) plan administrator to determine if a fee will be charged for preparing a QDRO. If so, the fee can be worked into the overall property division negotiation process. Another approach is to leave the plan intact, and to give other asset types to make up for one spouse’s share of the 401(k) account. No matter how the issue is handled, having the full scope of all costs up front is the best way to move forward.
Source: Bloomberg, “The Divorce Penalty: This 401(k) Fee Can Add Insult to Injury“, Suzanne Woolley, Jan. 23, 2017