Albuquerque Divorce Lawyer Blog

A Qualified Domestic Relations Order ("QDRO") is a specialized order issued by the Court to divide retirement benefits during a divorce proceeding. As a community property state, the law in New Mexico provides that each spouse is entitled to 50% of the retirement benefits earned by the other spouse during the marriage. Retirements benefits can include, among other things, pension plans, deferred compensation accounts and 401(k) plans.

Retirement plans can often be one of the most valuable community assets owned by a divorcing couple and there are different ways to approach division of retirement benefits. As a preliminary matter, the parties must determine the value of the retirement benefit at issues. This determination can be fairly simple as in the case of 401(k) account, which contains a readily identifiable amount of money on any given day. In contrast, the value of pension plans can vary greatly depending on how much the employee spouse is making at the time of retirement and at what age the employee spouse retires. In complicated retirement cases, the parties and their attorneys should think seriously about hiring an actuary or other trained expert to determine the value of the disputed retirement benefit.

After the value of a retirement plan is determined, then the parties (or the Court) must also decide how and when the benefits will be distributed. In the case of some 401(k) plans, the parties can split the account at the time of divorce. In the case of other pension plans, neither party receives their share of the retirement plan until the employee spouse actually retires.

The QDRO should address all of the issues regarding valuation and distribution of retirement benefits. Though it would seem that the valuation and division would be a straightforward mathematical calculation, the division of retirement accounts is often hotly contested. The drafting of the QDRO can be highly contentious. In turn, the QDRO must be submitted to the court for approval and then submitted to the QDRO administrator for its approval. Each plan requires specific language and Orders are often rejected for what appear to be very trivial drafting issues.

There are some QDRO administrators that will review the Order prior to filing with the court. Others require a court approved Order prior to review. In these cases, the Order may take several trips through the drafting process, approval by the Court and final approval by the plan administrator. This process can take a very long time.

In cases where retirement benefits are hotly disputed and the parties cannot agree on drafting, it is often beneficial to have a third party attorney draft the QDRO to reduce the conflict between the parties and their attorneys. Though this will often reduce the conflict and expedite the drafting process, even this step cannot alleviate the conflict in some cases. In those cases, it is often necessary to seek the intervention of the Court. Where this becomes necessary, the parties can be assured that they are embarking on a very expensive adventure.

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A variety of complicated emotional and legal issues arise when a person dies. And those issues get even more complicated when the deceased is involved in a pending divorce action. Does one party's death end the divorce proceeding? Does the surviving spouse serve as personal representative of the deceased spouse's estate? How does the Probate Code (the body of laws governing the estate of a deceased person) interact with the statues governing Domestic Affairs? The New Mexico Court of Appeals addressed these questions in two 2009 cases.

These questions are very important in a divorce action which is after all a dissolution of marriage. A dissolution of marriage means a division of property and debt. All community property and debt must be divided according to the law. It also means that the separate property and debt must be identified and divided as such. The division of property and debt has significant consequences for the parties. The division may also raise claims by creditors against the community property by creditors including mortgage companies, credit card companies, and even the IRS. As such, the fact that divorce legally survives the death of one of the parties is no trivial matter.

In Karpien v. Karpien, a case that arose in Sandoval County, the wife died during the parties' divorce proceeding which is commenced upon filing the Petition for Dissolution of Marriage. The district court appointed the wife's parents as the personal representatives of her estate (the personal representative is the party in charge of distributing the assets and addressing the outstanding obligations of a deceased person). The husband objected to the appointment of the wife's parents and argued that the wife's death essentially ended the divorce proceeding and that he was entitled to his inheritance as the surviving spouse under the Probate Code. The Court of Appeals disagreed with the husband and ruled that, upon the death of a spouse during a divorce proceeding, the divorce proceeding continues and the personal representative is charged with representing the interests of the deceased spouse.

But what if the will of the deceased spouse appoints the surviving spouse as personal representative? Just this situation arose in a case out of Albuquerque known as Oldham v. Oldham, in which the husband died during a divorce proceeding. The husband's will appointed his wife as the personal representative of his estate, which would have meant that the wife was charged with representing the husband's interest against herself in the divorce proceeding. The Court of Appeals overturned that appointment and ruled that such a situation created an inherent conflict of interest on the part of the personal representative, who in this case was the opposing party in the divorce action. The Court of Appeals sent the case back to the district court with instructions that the district court appoint another appropriate person to serve as the personal representative so that the divorce proceeding could be concluded.

When a family member dies, it is always important to consult an attorney about the probate process. And when that death occurs during a divorce, it becomes even more important to consult an attorney to make sure that all parties involved are compliant with both the Probate Code and the Domestic Relations statutes.

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Just to make the community property versus separate property distinction even more complicated, sometimes the different types of property can be so intermingled that the property that was once separate becomes community or property that was community can become separate property (although this second example is very rare). This process of mixing property is often comingling or transmutation, which was described in a 1982 case from the Second Judicial Court in Albuquerque, called Allen v. Allen.

The most common way that property is comingled or transmuted is by gift. For instance, in the Allen case, the wife owned a piece of property prior to the marriage, which she later deeded to herself and her husband jointly. The Court ruled that the deed was evidence of the wife's intent to gift the property to the community, which changed the property from separate to community.

However, property can also be transmuted without a document specifically designating a gift, but rather through the actions of the parties. This situation commonly arises with a home owned by one spouse prior to the marriage. Under the basic rules of community property, the marital home would be the separate property of the spouse who owned the home prior to the marriage. However, what often happens is that the mortgage payments for that home are made from the parties' community funds (remember that all income earned during the marriage constitute community funds, even if the parties have separate bank accounts).

The donative intent of the spouse giving the separate property to the community is the key to evaluating whether or not the property was gifted. And without a document specifically identifying a gift, it can be very difficult to prove that intent. These cases may require hiring an outside expert to trace all of the funds applied toward the property, which can be a very expensive process. As with any divorce settlement process, the spouses arguing over possible transmuted property need to balance the value of the property in question against the potentially high cost of proving transmutation.

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With few exceptions, the New Mexico Courts treat all debts incurred during a marriage, by either or both spouses, as community debt, which means that each spouse is equally responsible for the debt.

An important part of a divorce proceeding is a determination of which spouse will pay what debt after the spouses are divorced. After the spouses agree on, or the Court decides, who will pay each community debt, the Court enters a final order adopting that agreement or determination, which becomes binding on the spouses. However, that order is not binding on creditors that may be trying to collect payment of a community debt.

This limitation to the power of a divorce order is especially true when it comes to the Internal Revenue Service because a state court order is not binding on the federal government. During a marriage, when one or both spouses fail to pay federal taxes, the IRS has the power to collect those taxes for either or both spouses. The IRS may file a federal tax lien against any community property owned by the spouses, and is entitled to file a lien against any separate property owned by the debtor spouse. The IRS may choose to levy the wages or tax returns of either spouse.

Further, in New Mexico, the IRS can levy a spouse's 50% interest in community property for debts that were incurred before the marriage. The issue of federal taxes can severely complicate the property and debt division in a divorce proceeding. Spouses that are considering divorce and have outstanding tax issues should contact an attorney in order to avoid serious penalties.

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The general rule in the state of the New Mexico is that all debt incurred during a marriage becomes community debt, which means that both spouses are equally responsible for the debt. This is true even when one spouse creates a debt without the other spouse's knowledge, although there are some narrow exceptions to that rule.

Thus, as part of a divorce proceeding, both parties are required to identify all debts incurred during the marriage. Since these debts are most often community debt, the parties then need to decide how the debt will be divided between them. Essentially, each spouse is responsible for 50% of the debt unless the debt is divided pro rata based upon income, or some other way as agreed upon by the parties. The spouses (or their attorneys) must enter into a marital settlement agreement that identifies which spouse is going to take responsibility for which debt after the divorce is completed.

The parties' agreement with respect to the division of debt is then adopted by the Court in an order dissolving the marriage and adopting the Marital Settlement Agreement as an order of the court. The Second Judicial District Court in Albuquerque typically calls this order a Final Decree, but the name given by Courts around the state may vary. Whatever the title, the Court's final order is binding on the spouses and imposes a duty on each spouse to pay the debts that each agreed to pay.

However, problems often arise after a divorce is completed when one spouse quits paying a community debt that he or she agreed to pay as part of the divorce settlement. Even though the Final Decree is binding on divorcing parties, it is NOT binding on creditors seeking to collect a debt. This means that even after a divorce, a creditor may file an action against both spouses in an attempt to collect what was once a community debt. The collection is based upon joint and several liability for the community debt.

As a result, it is not infrequent that creditors go after one spouse for the debt assigned to the other in the Marital Settlement Agreement. Creditors are often extremely aggressive and unforgiving in their collection efforts. The law is unfortunately on their side. Any debt incurred during the marriage is arguably a community debt with respect to the parties. There are some exceptions such as gambling debts.

If you are considering divorce and have community debt, you should consider consulting an attorney to ensure that your marital settlement agreement clearly assigns that debt. And if you are being contacted by creditors for a debt assigned to your former spouse, you should contact an attorney immediately to discuss the enforcement of the order against your former spouse. Though you have few defenses against the creditor, you do have rights against your former spouse including orders of contempt, attorney fees and costs.

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Mediation is a relatively informal process in which a neutral third party facilitates communication between the parties to a divorce action or custody dispute, the goal being that the parties will resolve their issues themselves rather than having a judge decide those issues for them. A mediation is also often called a settlement facilitation and in several judicial districts around New Mexico, including the Second Judicial District in Albuquerque, there are services associated with the courts that can provide a mediation/settlement facilitation for little or no cost to the parties.

Often in a very contentious or complicated cases, the judge will order the parties to mediation/settlement facilitation in order to see if they can make some headway toward resolving their issues outside the Court. The mediation process is confidential and the rules of civil procedure prevent offers made during mediation from being used as evidence before the Court. Therefore, meditation/settlement facilitation can allow parties to freely discuss possible resolutions of their issues.

Child Custody Mediation is provided year-round at low to no cost depending on the income of the parties through the Court Clinic in Albuquerque's Second Judicial District Court. Settlement facilitation is broader in scope that child custody mediation. Settlement facilitation addresses all aspects of the divorce including the division of property and debt, the division of retirement accounts, the division of the community residence, and alimony, child support, and child custody. Divorce, custody and family law settlement facilitation is provided for free to the parties once per year during Settlement Week at the Second Judicial District Courthouse.

Parties can also arrange for their own mediation; most judicial districts around the state can provide a list of mediators in the area. The people, who act as mediators do not have to be attorneys, but they should be trained in the mediation process and, for maximum effectiveness, should also be familiar with family law issues.

The product of a successful mediation is usually a written agreement. This agreement that is often hand-written will be drafted into a Martial Settlement Agreement, which will then be submitted to the Court and incorporated in the final divorce decree. Thus, while parties do not have to be represented by counsel during the mediation process, a party should strongly consider having an attorney present because the decisions made at a mediation/settlement facilitation can have a serious impact on the property and custody rights at issue in a divorce proceeding.

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If alimony is an issue in your case, there are numerous options available to negotiate and satisfy the alimony obligation. Most of the time, alimony will be negotiated without the necessity of a trial. It should be pretty clear whether your case is an alimony case. If your case is an alimony case, then negotiation and settlement of this issue will likely be preferable to any outcomes you can achieve in a very unpredictable divorce trial.

Should the case proceed to trial, the Court will consider the length of the marriage, the relative income of the spouses, and other relevant facts in a determination of whether and how much alimony should be awarded. These considerations are set forth in the alimony statute as well as the Alimony Guidelines which are followed by the Second Judicial District Court in Albuquerque as well as most of the other district courts around the state. The statute and the guidelines should be consulted early in your case to avoid what could be a long, expensive and the end disappointing process.

Should the parties reach an agreement on alimony, then there are countless ways to structure to payment of alimony. In many cases the spouses may choose to simply follow the Alimony Guidelines by receiving their spousal support/alimony in the form of a monthly payment. However, the spouses can agree that the paying spouse will make a one-time, lump sum payment of spousal support/alimony in lieu of ongoing payments.

Lump sum alimony can itself be structured in a variety of ways. The spouses are free to offset spousal support/alimony against other assets. New Mexico's adherence to the principles of community property means the spouses are entitled to an equal distribution of the assets upon the dissolution of the marriage. Spouses often agree to incorporate a lump sum payment of spousal support/alimony into a community property settlement through an additional allocation of assets to the receiving spouse.

Likewise, as a community property state, New Mexico also holds spouses equally responsible for community debt, which basically includes all debt incurred during the marriage, which provides another option for the offset of spousal support/alimony. The spouse that owes the spousal support/alimony may take on a greater share of the community debt to satisfy a lump sum payment.

In sum there is some flexibility in granting spousal support/alimony and the challenge is to achieve a solution that meets the requirements of the law, while also meeting the financial needs and abilities of the parties. However, this flexibility quickly disappears should the parties proceed to trial. Family court judges have enormous caseloads. They have little time to address alternative means of alimony. Once the matter is before the court, there is typically only one option and that is monthly payments based upon the worksheets set forth in the Alimony Guidelines.

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In New Mexico, the divorce process begins with the filing of a Petition for Dissolution of Marriage with the District Court of the County where one or both spouses have lived for at least six months prior to that filing. In order for the Courts of New Mexico to have jurisdiction over the case, one of parties must have lived in the State for at least six months.

While there are multiple grounds on which the Court can grant a divorce, New Mexico has what is often referred to as a "no fault" divorce policy, which means that the Court will grant a divorce based solely on the incompatibility of spouses. The vast majority of divorces in New Mexico are granted on the basis of incompatibility.

The Petition is a basic document, in which one spouse requests the Court enter an order dissolving the marriage. The Petition must include the following information: the date of the marriage; the names and ages of any children born to the marriage; and the date of the separation of the spouses. Primarily, the Petition also asks the Court to: divide and distribute the spouses' community property and community debt; identify and award any separate property and separate debt; determine child custody of any children born the marriage; determine child support for those children; and, award spousal support, also called alimony, if appropriate.

In most cases, after the filing of the Petition begins the process, the other major documents left to be filed with the Court are called: the Marital Settlement Agreement, often referred to as an MSA; the Parenting Plan; and, the Final Decree. The MSA is a detailed agreement that identifies and divides the community property and debt of the parties. The Parenting Plan, which is often incorporated into the MSA, specifically outlines custody and visitation arrangements for any children born to the marriage and will include a Child Support Worksheet explaining how child support will be paid between the spouses. The Final Decree is the final order of the Court adopting the contents of the MSA and Parenting Plan and granting the spouses a divorce.

Of course, in a complicated and/or contentious divorce there can be countless other documents filed with the Court as the spouses try to settle the issues division of property and debt, alimony, child custody and child support. There may be many other issues along the way such as domestic violence and orders of protection.

However, every divorce action will begin with a Petition for Dissolution of Marriage and end with some final order of dissolution of the marriage. There are many possible roads from one point to the other. The shortest and least contentious route is generally the best for the parties, the children and if that is not enough, the parties' money.

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