Interplay of Local Rules and Separation Language Decision

Interplay of Local Rules and Separation Language Decision

Tekamp v. Tekamp, 12th Dist. Warren No. CA2018-08-092, 2019-Ohio-2382 (Decided June 17, 2019).

Issue: How should a court address gains and/or losses on the alternate payee’s portion of a defined contribution (DC) plan when the agreed-upon divorce decree is silent on the matter and an applicable local rule states gains and/or losses are assumed?

Decision: The Twelfth District Court of Appeals affirmed the Warren County Court of Common Pleas Domestic Relations Division’s (trial court) decision that the Wife’s portion of the Husband’s 401(k) benefit was to be adjusted for gains and/or losses between the date of divorce and the distribution—even though the decree was silent on the matter. The divorce decree in this case, which reflected the parties’ agreed-upon division of the Husband’s 401(k) account, simply stated, in relevant part, that said account was to be “divided 50/50 by QDRO.” The Husband contested a proposed Qualified Domestic Relations Order (QDRO) that awarded the Wife gains and/or losses from the period between divorce and distribution of the funds because the decree was silent on that issue. The trial court disagreed with the Husband’s argument because the trial court’s local rules explicitly state:

Unless otherwise agreed, a QDRO for a defined contribution plan shall contain the following provisions or be governed by these assumptions:

                                *                                             *                                             *

b. the alternate payee’s share of the benefits shall be credited with investment earnings and/or losses from the date of division until contribution[.]

(emphasis added).

The trial court determined, and the Court of Appeals affirmed, that, the above local rule establishes an assumption in the Warren County Court of Common Pleas Domestic Relations Division that, without explicit language to the contrary, gains and/or losses are included for the division of all DC plans.

Observation: For those of you that regularly read our blog, you will notice a theme that we have noticed over the years, the division language for retirement benefits matters. This is just another example. If, as the Husband claimed, the parties truly intended to exclude gains and/or losses from the Wife’s share of the 401(k) benefits, they should have explicitly included this intent in the agreed-upon divorce decree language.

Be aware of the local rules of the court you are in and be careful about the division language in the divorce decree or separation agreement. Otherwise, your client may not be receiving what he/she expected.

How we can help: We offer free separation agreement language on our website, our legal services section can help draft custom separation language for your case; we offer solutions for negotiations, and we of course can draft the QDRO for you.

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