When You Write Gains and Losses, Who Is on the Hook?
From the Settlements Done Right newsletter. "Adjusted for gains and losses" sounds precise. In practice it can leave a settlement unsettled.
In this edition, Denisa shows how the phrase "adjusted for gains and losses" creates ambiguity about who carries the risk between signing and the day the QDRO is processed. In one case, withdrawals, market moves, and investment changes left the account short of the original award, and the parties ended up litigating who was responsible.
The takeaways
- Specify upfront how market movement and account activity are handled in the gap between signing and processing.
- Define the marital share as a number a plan administrator can actually execute, not a phrase that reads well.
- Settling these questions before signing costs far less than fighting over what the agreement meant afterward.
Go deeper in the gains and losses in a QDRO guide, Denisa's related ACFLS Journal article, and the settlement language review guide.
TOVA is not a law firm and does not give legal or tax advice. Counsel makes the legal calls.
Read the full edition
This edition was published in Settlements Done Right, Denisa's biweekly newsletter for divorce attorneys.
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By Denisa Tova-Liebman, MBA, CFP, CDFA, CQS