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Monday, August 16, 2021

When it comes to Dividing Pensions in Judgments of Divorce - Choose Your Words Carefully

By Michael Nichols
Categories: Divorce

“Choose your words carefully” is a lesson both parties learned in the recent case of Hein v. Hein, regarding Qualified Domestic Relations Orders (QDRO). The case is Michigan Court of Appeals Docket No. 353272 and 353285, scheduled for publication. Hein involved a couple who had been married for thirty-eight years. The Plaintiff-husband had a pension and the parties negotiated a distribution of the pension and entered into a consent judgment which contained the following provision:

IT IS FURTHER ORDERED that Plaintiff, Kurt J. Hein’s, Office of Personnel Management pension shall be divided equally (emphasis added) between the parties pursuant to a Qualified Domestic Relations Order and Terri J. Hein, shall be considered a surviving spouse for purposes of distribution of this pension benefit.

After the Judgement of Divorce was entered, Defendant-Wife’s counsel prepared a QDRO with the following language:

However, in the event that the Former Spouse dies before the Employee, OPM [Office of Personnel Management] is directed to pay the Former Spouse’s share of the Employee’s FERS benefit to the Former Spouse’s estate.

Defendant-Wife’s Attorney sought to enter the QDRO under the 7-day rule (which was not proper procedure because the court had not issued any judgment on that issue - it was negotiated).

Plaintiff-husband filed an objection stating that this language conflicted with language from the Judgement and requested a hearing. He was not represented by counsel at the time this request was made. Plaintiff-husband claimed that the provision from the QDRO did not “equally divide” the pension as under federal law if he were to predecease Defendant-Wife, she would receive a benefit while his estate would not. He believed that she would receive half the benefit during her lifetime and only receive the survivor benefit if she outlived him. Defendant-wife cited state law in support of her interpretation of “equally divided.”

The trial court ruled in favor of Defendant-Wife and entered the QDRO Order. No evidentiary hearing was held.

As you may have guessed by now, the Plaintiff appealed. The Michigan Court of Appeals reviewed the matter. Concerning the interpretation of consent judgements, the Court stated:

Although a consent judgment gains the enforcement power of a court judgment, it remains a contract in which the parties negotiated an agreement, rather than the kind of judicial act in which the court determined the rights and obligations of the parties. Heim citing Trendell v Solomon, 178 Mich App 365, 367-370; 443 NW2d 509 (1989); Acorn Investment Co v Michigan Basic Property Ins Ass’n, 495 Mich 338, 354; 852 NW2d 22 (2014).

In this case, the Court of Appeals determined that both parties’ interpretations of “equally divided” were plausible and therefore the term was ambiguous. Since the term was ambiguous, the parties had a right to an evidentiary hearing to determine what the intent of “equally divided” was. While Plaintiff-husband did not specifically ask for an “evidentiary hearing,” the fact he was in pro per and requested a “hearing” was enough for the Court of Appeals to determine a request was made properly and the trial court erred in not holding the hearing.

By attorney Eric Schroeder, LLM, MPA. Mr. Schroeder is an attorney who practices family law and asset protection in particular.

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Mike Nichols is a national leader in drunk driving defense. He is a member of the Forensic Committee and Michigan delegate to the National College for DUI Defense. He is also a Sustaining Member of the College. Nichols is also a founding member of the Michigan Association of OWI Attorneys; a member of the American Chemical Society; an associate member of he American Academy of Forensic Science, Adjunct Professor of Forensic Evidence in Criminal Law and OWI Law and Practice at Cooley Law School. He is also author of the West OWI Practice book and several chapters in other books on science and the law.

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