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Out Of Wedlock Children Child Support Enforcement Domestic Relations Orders

Consider the following:
In 1984 Harry and Shirley were working for a major communications firm. In early 1985 the relationship flourished and they began living together. In 1987 a child was a result of their relationship. In 1989 a second child was born of their relationship. The parties never married but continued to live together until 1994. In 1994 Harry received a promotion and was relocated to Europe. He remained in Europe for several months and was then relocated by the firm to another state. Upon Harry’s departure for Europe all voluntary payments to support the children ended. When Harry returned from Europe he continued to ignore both Shirley and the two children born of their relationship.

On February 1, 1995 Shirley was awarded monthly child support by a court of competent jurisdiction, in the amount of $200.00 for each child. Harry though prospering in his new position did not honor this child support Order. Moreover, Harry had married and was living far from Shirley. By August 1, 2002 Harry’s arrearage had grown to $36,000.00.

QUERY:
Is it possible to obtain a Domestic Relations Order against Harry’s Pension Plan(s) with Jell South Communications for the full amount of the child support arrearage? Bear in mind the parties never married.

Troyan, Inc. maintains that the Retirement Equity Act is not a bar to Shirley’s obtaining a Domestic Relations Order against Harry’s Plan. Of interest is Trustees of the Directors Guild of America v. Tise, et. al. 255 F.3d 661, 12/6/00. The statutory basis for the child support Order begins at 29 U.S.C. §1056(d)(3)(B)(i) which defines Domestic Relations Order. The key to drafting Child Support Enforcement Orders is found at 29 U.S.C. §1056(d)(3) (B)(i)(l), which reads:

(I) relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant, and...

(II) is made pursuant to a State domestic relations law (including a community property law). 29 U.S.C. §1056(d)(3) (B)(i)(ll)

It is emphasized herein that marriage is not a requirement to obtain a Domestic Relations Order for child support. What is necessary is an Order from a Family Court.

COMMENTARY:
Consider the broad application of this concept. When discussion of this tactic does not soften the defaulting parent make clear that ongoing arrearages are the foundation upon which ongoing Enforcement Orders are built. These Orders will be useful up to the point that 100% of the Pension has been assigned to your client. Further, there is no federal bar to interest on the arrearage. Thus the actual loss of $36,000.00 would if default interest is accrued at 6% amount to $55,730.96. If legal expenses are added the actual amount in the Domestic Relations Order could be greater.

There need not be a limit on the time for the creation of these Orders. They will endure so long as the defaulting individual fails to comply. If a post-compliance breach occurs, then a new Order may be issued. This tactic is especially potent tool against active plans as opposed to a retired individual. The growing assets of active plans are subject to assignment so long as it is necessary to enforce Orders. Additionally, if the more liquid Qualified Defined Contribution Plan has been fully assigned to your client, Troyan, Inc. maintains that there is no bar to then reaching the defaulting individual’s Defined Benefit Plan. To assign the Qualified Defined Benefit Plan Benefits of the Defaulting individual, Troyan, Inc. creates a series of actuarial equivalents at various interest rates so that the monthly benefit of the defaulting parent is incrementally assigned to the other parent. Appropriate enforcement language has also been crafted by Troyan, Inc.. A further virtue of this tactic is that there is no need to proceed in the current jurisdiction of the defaulting parent to obtain this type of relief. Relief will be obtained in the state issuing the original Order. Since the resulting Domestic Relations Order is national in reach, an ERISA Florida Child Support arrearage Order is recognized against an ERISA Plan in Alaska.

Strategies:
It is suggested that the first target of this remedy be the defaulting individual’s ERISA Qualified Defined Contribution Plan. It is observed that although plans have a minimum distribution age of 50, this age requirement is often waived if the reason for the distribution is a Qualified Domestic Relations Order. Troyan, Inc. will advise you of the earliest date a distribution to an Alternate Payee can be made pursuant to an arrearage Qualified Domestic Relations Order. When a Qualified Defined Contribution Plan is not available, the Qualified Defined Benefit Plan may be the target. This will not generally produce an immediate distribution to your client, however, as the defaulting parent sees his entire pension being eroded, it is likely that the arrearage will be satisfied. Domestic Relations Orders against Qualified Defined Benefit Plans are a bit more complex as they require conversion of current dollars into monthly benefits. Further, to bar loss of entitlement it is necessary to award your client survivor benefits in an amount equal to the arrearage. Again the necessary actuarial calculations are performed by Troyan, Inc..

Alert:
The true Alternate Payee in this discussion is the child/children. Since, minor children cannot represent their own legal interests, we have found no difficulty in making your client the Alternate Payee. We mention this so that you are prepared should the Plan Administrator raise this point.