Dealing with Divorce

Divorce can be one of life’s biggest challenges. There are many issues to be dealt with, and the emotional and financial toll can be significant. Your Carpenter benefits may have to be considered as you go through this difficult process. Here are some things you should know if you’re thinking about divorce. 

California is a community property state; Spouses are considered joint owners of nearly all assets and debts acquired while married. Community property rules apply to your Carpenter Retirement benefits.

The Fund Office needs to know about any changes to your marital status, and details pertaining to your divorce settlement. So, we must request and review divorce documents. The Fund Office must follow what has been signed and filed with the court. Once your divorce is final your former Spouse is no longer an eligible dependent on the health plan.

How Much Would my Ex-Spouse Receive of my Pension, Annuity and 401(k)?

As a general rule, when it comes to splitting Retirement benefits in divorce, as community property a Spouse will receive half of what was acquired during the marriage. Benefits earned prior to marriage or after separation are considered separate property, and are often excluded when assets are divided.

Divorce settlements vary and every case is unique. Retirement benefits are not always split 50/50. You may be able to negotiate to keep more of your benefits by offering something else in return. As a simple example, if you bought a house together, you might negotiate for your Ex-Spouse to keep the house while you keep 100% of your Pension Plan.

I am Separated from my Spouse, What Now?

For the most part, separation does not remove a Spouse from your benefits. You cannot remove a separated spouse from your medical plan, nor can you remove your Spouse as your Beneficiary from your Pension or Annuity Retirement plans unless they are willing to sign a notarized waiver form. You can remove a separated Spouse as the Beneficiary of your Life Insurance and Vacation Plans.

How does the divorce process work?

In most divorce cases lawyers and/or mediators help negotiate terms and divide property.  During that process, Spouses usually share financial disclosures. The Fund Office can provide a Community Property estimate by submitting an Estimate Request Form. To get a form, call the Fund Office or find it online in the “Forms & Documents” section of the carpenterfunds.com website. Processing takes about 45 days.

What Documents are required once Divorce Terms are Final?

There are two types of divorce documents. The first is a divorce decree that confirms the date your divorce becomes final and includes a settlement agreement that defines how assets are divided.

Once you have a copy of your finalized divorce decree and marital settlement agreement, you should immediately provide a copy to the Fund Office along with a new enrollment form. It’s important to update your Beneficiary information.

The second form of documentation is called a Qualified Domestic Relations Order, or QDRO. In divorce, a QDRO is a legal document that recognizes a former Spouse is entitled to receive a predetermined portion of Retirement Plan assets. A QDRO must be approved by both the Fund Office and a court.

• A QDRO draft is usually prepared by an attorney or paralegal; in some cases the Participant may draft their own QDRO
• Typically, a QDRO is submitted to the Fund Office for review, then filed in court
• Once filed with the court, the QDRO is brought back to the Fund Office for final review
• Pension, Annuity and 401(k) usually have separate QDROs but they may be combined

What happens when I retire?

When you apply for Retirement benefits, we will confirm that divorce information and documents have been provided before we can process your Retirement Plan benefit. Community property segregations are based upon marital settlement agreements and QDROs. Ex-Spouses will be responsible to apply for their separate benefits under what is called a QDRO Retirement application.

Member Assistance Program (MAP) Benefit Can Help 

A divorce can cause stress and financial hardship; your MAP benefits may be able to help. How?

• Free 30-minute telephone or in-person consultation with an attorney or mediator
• Financial professional can help you understand your financial issues, options and challenges
• A list of community resources that may be available to you
• Mental health resources + 6 counseling sessions for you and every family member
• Call 1-800-999-7222. Code word – Carpenters Trust

Important: If you need immediate help, call the 988 Suicide and crisis hotline

To Recap:

• Your Retirement benefits are considered part of community property
• It is important to keep in touch with the Fund Office and notify us once you are divorced
• When you apply for Retirement benefits, divorce documents will be requested and reviewed if not already on file
• Separated, not divorced – Complete new enrollment form, changing marital status to Separated
• Divorced – Submit divorce decree and marital settlement agreement to Fund Office immediately when finalized
• Change your Beneficiaries
• A QDRO may be filed that defines how benefits are paid to your Ex-Spouse
• Help is available through MAP benefits – call 1-800-999-7222, code word Carpenters Trust