Financial Taboo...And How to Split a Retirement Plan in Divorce

Updated: Mar 15

Life would sure be a lot easier if we all knew everything all the time. For instance, it would be great to know how to fix my brand new electric water heater when it beeps and has an error code ECC. But I do not know everything, and I sure don’t expect you to either.


Why is it when I call the water heating company I feel no shame admitting that I have no clue what to do next and asking when someone can come out to fix it (soon!), but most women are not open to admitting they do not know what to do when it comes to money issues? What makes it different? And more importantly, how can we learn what we need to know without sacrificing or questioning our confidence?


What is it about finances and divorce that creates such taboo? The buildup to the act of divorce is already stressful enough, we don’t need self-doubt to compound this stress. I often have female clients tell me they feel intimidated about their household’s financial situation. Why do we believe it isn’t threatening to call the electrician to have them come out and fix that problem with no feelings of inferiority, shame, or loss of control?


This question goes through my head almost everyday, whether in one-on one meetings with clients or during large group presentations where I am the main speaker.


Sometimes to kick off the financial presentation, I will ask women to think of a time in their own lives, where they could admit that they were comfortable sharing with that they did not know about their family’s money situation. Could they talk about how they just had no idea what the household balance sheet looked like? My goal in meetings with clients and during presentations is to make the financial aspects of divorce and money easy to understand and, most importantly, less intimidating. Usually, after the room is silent, I tell everyone about something I just did in life that I had no clue what I was doing, and they were probably just like me and called someone who was okay explaining it to them. So why is money so different?


My goal in meetings with clients and during presentations is to make the financial

aspects of divorce and money easy to understand and less intimidating.


I like to normalize money by comparing it to not knowing what the electrician or yoga instructor lingo is. (I never look at my yoga teacher and feel incompetent because she knows all the names to every pose, and I do not.)


What about money makes these similar experiences so different?


I bring this up when you are thinking of divorce, AND you may lack the confidence to know if you can even go through the process financially.


Please know that you are not the only one.


The below newsletter is for those who are not ready to inquire about your financial situation (whether it be due to fear, worry, or feelings of shame.)


I interviewed a sought-after lawyer, Dru Horenstein, who specializes in one area of divorce. And it is perfectly fine to not know what you don’t know. Nobody here is judging. I am sure Dru feels the same. If someone called her to answer questions about a type of law that she doesn’t practice, she wouldn’t feel shame or inadequate as a lawyer, she would simply get you to the right person and say she did not know the answer without feeling shame! We women need to get more comfortable releasing needless guilt.

OLIVIA: What is a Qualified Domestic Relations Order (QDRO)?:


DRU HORENSTEIN: A “qualified domestic relation order” (QDRO) is a domestic relations order that creates or recognizes the existence of an “alternate payee’s” right to receive. Or a QDRO assigns an alternate payee the right to receive all or a portion of the benefits payable concerning a participant under a retirement plan. That includes certain information and meets specific other requirements. An alternate payee is a child, former spouse, or another dependent of the participant.


OLIVIA: So, a QDRO may help my female client get part of her soon-to-be ex’s retirement plan. And it is best drafted by someone who understands what a QDRO is...which brings me to my next question.


OLIVIA: Is a QDRO something that any lawyer or mediator can do for their clients?


DRU HORENSTEIN: That is not really a question that can be answered without a long explanation. (Olivia sighs as she was so excited to hear an easy explanation when it comes to something in divorce and money!) Short version: A QDRO is a legal court order that must draft consistent with the federal and state law that governs the plan. A non-lawyer can represent themselves in court in their own divorce and draft it if they have the knowledge to do so. There are QDRO document companies, but only a lawyer or a client representing themselves can sign and present that order in court. A legal technician has authorization in the state of Washington.


OLIVIA: What are the one or two things that you frequently hear from your clients that you wish everyone could know before getting into the QDRO process (or before getting into the divorce process in general)?


DRU HORENSTEIN: It is crucial that clients fully understand the retirement asset. Is it a pension, 401(k), or an IRA? And what are the plan procedures? And the law that allows a transfer of an interest in that retirement asset to another person? Also, the clients need to understand the financial impact of their choices regarding the retirement asset.

At the end of this discussion with Dru, I know I am treating QDRO’s like the electrician. I will not feel intimidated, scared, or stupid and will call the expert who can take care of my issue. No shame in creating a professional divorce team that helps you answer the questions you have, especially when they relate to topics you are not supposed to be familiar in the first place!

As always, visit my site summerhillwealth.com for more resources, or listen to my podcast ‘Divorce for Wealthy Women’ for other helpful tips. No matter where you are on your divorce journey, ask questions and understand you will not know everything (and that’s OK!). Being curious about your own emotions and money and how it is so typical not to know anything about it takes the pressure off, I promise.