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Prior to dealing with the subject matter of this article we think it useful to alert the practitioner to the significance of assigning to a non-lawyer the preparation of a Domestic Relations Order or related legal documents. It is emphasized that our Domestic Relations Orders are attorney prepared. Consider the practitioner's exposure when he or she retains a non-lawyer to prepare a legal document (QDRO). We carry malpractice insurance, clearly the non-lawyer (a/k/a "QDRO Specialist") does not. It is constructive for the practitioner to realize the significance of assigning to a non lawyer the preparation of a Domestic Relations Order or related legal documents. The preparation of a Domestic Relations Order constitutes the preparation of a legal instrument. Should you delegate a legal function to a non lawyer it is suggested that you confirm with your malpractice carrier that such delegation of duty does not limit/nullify your policy coverage.

Surprise is the omnipresent foe of the attorney. Unanticipated events that result in economic damage to your client must to the extent possible be avoided. The options available to a retiring Florida Retirement System employee represent a surprise potential that the practitioner ignores at his or her peril. At the time of divorce, especially a divorce involving an individual many years from retirement, there is a reasonable probability that minimal attention will be paid to the retirement options available to him or her at retirement. This article focuses on one of the options available to an FRS employee upon attaining normal retirement age. At that time he or she has the option to elect to defer retirement and enter the Deferred Retirement Option Program (DROP). The informed practitioner will be mindful of this option during negotiation and drafting of a Domestic Relations Order. Further, language should appear in the Property Settlement Agreement/Final Judgment of Dissolution of Marriage specifically addressing how a DROP election by the titled-spouse will effect the retirement benefits to be paid to the respective spouses. Prior to reading this article the reader is directed to our WEB article discussing "Boyett" and the allocation of pension benefits on divorce.

Suggested Reading:

Ganzel v. Ganzel (11/8/2000), 25 Fla. L.Weekly D 2617
Swanson v. Swanson (4/23/2004), 29 Fla. L. Weekly D 865
Self v. Self (6/10/2005), 30 Fla. L. Weekly D 1467
Russell v. Russell (3/22/2006), 31 Fla. L. Weekly D 849
Nix v. Nix (5/3/2006), 2006 Fla. App. LEXIS 6519

At the time of divorce attorneys come to an agreement regarding the division of pension benefits between the spouses. Our concern is attorney failure to incorporate into the Property Settlement Agreement/Final Judgment of Dissolution of Marriage language that makes clear how all DROP assets are to be distributed when the titled-spouse defers retirement and elects to participate in the DROP.

First let us note Ganzel v. Ganzel which provided:

...Once the judgment of dissolution, which incorporated the settlement agreement, was entered, marital property rights no longer existed and only individual property rights remained

Then let us note Swanson which provided:

Furthermore, as is obvious, 45% of the value of the former Husband's pension benefits as of January 17, 1990 belongs to the former Wife. Therefore, the interest and cost of living adjustments which were applied to the former Wife's share, despite being in the former Husband's DROP account, should also belong to the former Wife. Moreover, the former Wife sufficiently established that the DROP account received a 3% cost-of-living adjustment on the first day of each July, and it accrued tax deferred interest "at an effective annual rate of 6.5 percent compounded monthly, on the prior month's accumulated ending balance, up to the month of termination or death." §121.091(13)(c), Fla. Stat. Therefore, we hold the trial court erred by not awarding the former Wife interest and cost of living adjustments which accrued in the former Husband's DROP account.

Also note Russell which in additional to being a reaffirmation of Swanson, made clear: the fact that the DROP came into existence after entry of the final dissolution does not present a bar to a Former Spouse's participation in DROP


In 2006 at age 39 Jim Smith divorces Joan. Jim is an active participant in the Florida Retirement System. At the time of divorce it was agreed that Jim's monthly accrued benefit as of the Date of the Filing of the Action for Divorce was $1,152.00. It was further agree that Joan was entitled to half of the marital part of Jim's monthly accrued benefit ($1,152.00 multiplied by 94.44% = $1,088.00). Thus, Joan's share at retirement is $544.00. Jim's lawyer inserted this understanding into the Property Settlement Agreement/Final Judgment of Dissolution of Marriage. A Domestic Relations Order was then filed with the FRS giving Joan a monthly benefit of $544.00 when Jim retires. Thus, at the end of this action Jim's lawyer assures Jim that that when he retires his Former Spouse will receive each month from his pension $544.00, nothing more.

Jim assumes he will retire at age 62. Over the period from his current age of 39 up to his age 62 (23 years) he assumes his pension will grow and he will still only have to "pay" Joan that fixed monthly amount of $544.00. Jim is satisfied.

Time and circumstances impact on people and their retirement thoughts. What if at age 62 instead of retiring Jim enters the DROP and continues in the DROP for five years? Will Joan's monthly benefit remain at the $544.00 that was agreed to upon divorce and inserted into the Domestic Relations Order?

Recall, Jim, at the time of divorce was reassured by his attorney that Joan will get a monthly benefit of $544.00 when Jim retires. "Nothing more"!

What will Joan actually get when Jim actually retires after five years in the DROP program?The data that follows is based on 2006 DROP Benefit Statistics of the FRS.

The spreadsheets that were the basis for this illustration are not shown for ease of presentation.

Based on annual pay increases of 2.5% Jim's actual monthly accrued benefit at retirement will be $3,992.66*. Joan was entitled to $544.00 when Jim retired. Joan's share when Jim enters the DROP constitutes 13.62% of Jim's actual benefit upon entering the DROP. Thus, at the time that Jim actually begins to receive his pension, Joan, based on the above cited cases will not receive $544.00 each month. Instead Joan's monthly benefit will be $630.65. This increase represents the annual 3% COLA increase in the benefit from the point of entry into the DROP until Jim's formal retirement 60 months later (for teachers it can be up to 96 months). For Joan the initial monthly benefit was $544.00. At a 3% annual COLA increase her final benefit is $630.65 (sixty months later).
*As stated earlier the mathematics for this illustration is not shown. The progression for Jim and Joan's benefit as of the Date of Dissolution to the Date of Jim's retirement are based on FRS benefit growth data. The same is true for the cash accumulations discussed immediately below.

Additionally, based on the FRS's DROP values for 2006 when Jim begins to collect his benefit the total DROP cash accumulation will be $297,624.00. However, 13.62% based on the above decisions is Joan's property. Hence she will receive a lump sum payment in the amount of $40,551.23.

Can Jim argue that his attorneys failure to properly craft his settlement and Domestic Relations Order cost him $40,551.23 plus the present cash value of the additional monthly benefit paid to Joan over Jim's lifetime or:
($630.65-$544.00 = $86.65) or $11,506.25.

Jim could argue that a flawed settlement cost him $52,057.48 ($40,551.23 + $11,506.25) . If Jim presented this argument to the bar does it rise to be level of a valid complaint against his attorney?