Notice of Adverse Interest to Retirement Plans In Divorce

Notice of Adverse Interest to Retirement Plans In Divorce

Your Ex Has Retirement Plans

If your ex has retirement plans during the divorce, and you suspect they may cash it out, research the plan and immediately send out a Notice of Adverse Interest to the plan.

Notice of Adverse Interest

A Notice of Adverse Interest is exactly the way it sounds – a letter notifying the plan that there may arise a community interest in this accout (of which you are legal entitled to).  Upon receipt of the letter, the plan will be “frozen” and unable to be liquidated.

Family Code 755 (b)

California Family Code 755 (b) states the law where Notice of Adverse Interest comes from.

Sample Language

Pursuant to California Family Code section 755, YOU ARE HEREBY NOTIFIED that ___  is claiming a community property interest in  ____’s 401(k), pension, stock option, deferred compensation, or retirement benefits (both qualified and non-qualified) under any Plan which you maintain for the benefit of __, SSN# ______, DOB _____.

Should you pay any such claims following this notice, you and/or the plan will be subject to liability for such payments under In re Marriage of Baker (1988) 204 Cal.App.3d 206, 251 Cal.Rptr. 126. and will not be eligible for the protection afforded by California Family Code §755(b).

You are instructed to pay no claims and allow no elections until further notice or withdrawal of this Notice (excepting therefrom investment choices which may be exercised by participants under Internal Revenue Code §404(c)) under any plans, policies or accounts which you may maintain for the benefit of  ______.***

*** Use of this sample language is at your own risk.  Consult and hire an attorney in your jurisdiction.

Joinder

The law requires some retirement plans to be joined to the divorce proceeding.

“Joinder” is a legal process that names a third-party claimant to a divorce case and notifies the retirement plan that a former spouse has a right to a portion of an employee’s benefits.

A joinder is completed by filing various joinder forms with the court, serving the joinder forms on the retirement plan administrator, and the retirement plan administrator filing a response to the joinder. The Judicial Council joinder forms can be found on the California Courts website, see FL-318INFO, FL-370, FL-371, FL-372, and FL-375.

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