Modifying Your Oregon Divorce Judgment

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A divorce (or custody case) is a major life event which is based on the circumstances that exist at the time your judgment is finalized. What happens if things change several months or even several years after your judgment has been signed? Here is a basic guide to modifying your divorce or custody judgment in Oregon. This is only an overview and is not intended to be legal advice – you should discuss the specifics of your situation with your mediator or attorney.

Overview. Generally speaking, child related issues and spousal support are subject to modification. Property division, on the other hand, is final. A property division can only be reopened if you discover that an asset or liability was omitted (either accidentally or intentionally) from your original judgment. ORS 107.452 is the statute that applies if an asset was overlooked in the original divorce.

Child Support. Child support can be modified when 1) there has been a substantial change of financial circumstances; 2) every three years even if there is no change of circumstances; or 3) if both parents agree to the change. It is important to note that a change to child support must be put into a new judgment which gets signed by a judge. It is not sufficient to have a “handshake” deal regarding child support.

In Oregon child support can be paid up until age 21 if the child qualifies as a “child attending school” under ORS 107.108. What this means (oddly enough) is that your child is a party to your divorce between the ages of 18 and 21 and that he or she can file a motion to modify your divorce judgment to seek child support from either or both parents.
Parenting Plan. The legal standard for modifying a parenting plan is simply a “best interest of the child” standard. In other words, if someone thinks it is in the child’s best interest to change the plan, they can make a formal request to change it either by filing a motion with the court or proposing to go through the mediation process.

Like child support, a parenting plan can be modified anytime both parents agree. One-time change do not need to be put into a new parenting plan. However, if you are going to make a permanent change to the parenting plan then you should submit a new parenting plan to the court (using a Stipulated Supplemental Judgment) and get it signed by a judge. You should be aware that a new parenting plan is not enforceable unless it is in a new judgment that is signed by a judge.

There is a common misconception in Oregon that there is a certain age at which children are allowed to pick where they live. That is not true. However, based on the circumstances of your situation (e.g., child’s age, maturity level, etc.), a child’s preference may be taken into account in developing the parenting plan. In certain situations parents will sometimes include their teenage children in the mediation process when developing a parenting plan so that the children’s preference can be considered.

Decision Making (Custody). The decision-making provision of your judgment (i.e., legal custody) is subject to modification as long as your children are under 18. Joint custody can essentially be modified whenever one parent decides that joint custody is no longer working well and files a motion to sever joint custody. At that point the court has to award sole custody to one parent or the other since there can be no joint custody in Oregon unless both parents agree. Sole custody can only be modified when there has been a substantial and unanticipated change of circumstances that goes to the ability of one parent or the other to care for the children.

Spousal Support. Spousal support (alimony) can be modified any time that both parties agree to it. If there is no agreement, then applicable legal standard is that there must be an “unanticipated and substantial change of circumstances” to change support, i.e., a major life event. Just because there has been a major life change does not necessarily mean that support will be modified; it only means that someone can request a modification. Whether or not there is a modification will depend on the facts and circumstances at the time that the request is made.

Common reasons for modifying spousal support include retirement of the payor, the payor losing his or her job, the recipient getting remarried or the recipient changing careers and significant increasing his or her own earnings. Again, just because one of these things happens does not automatically mean that a spousal support modification will be granted.

As with child support, a new spousal support agreement must be put into a new judgment which gets signed by a judge. Failure to put the modified support arrangement into new judgment will make the agreement ineffective and can lead to some very serious negative consequences for one or both parties.

Spousal support can only be modified as long as there is a spousal support order in place. Additionally, spousal support cannot be ordered later on if there was never a spousal support order in the first place. Lastly, if your spousal support order has ended it cannot be reinstated. There is an exception to this rule which is that if spousal support had been terminated early and the reason for termination has ended the spousal support can be reinstated if you are still within the timeframe of the original support award.

Misc. Issues. There are a number of other smaller issues that are subject to modification, although they are typically only addressed if one of the major issues above is also being modified.

Some of those smaller issues include:
• Who will provide health insurance for the children;
• How the children’s unreimbursed medical expenses will be paid;
• How non-medical expenses for the children will be paid;
• The amount of life insurance that needs to be maintained; and
• Who will claim the children on their taxes.

Mediation tends to be a very efficient process for dealing with modifications. Usually a modification can be mediated in just one or two mediation appointments. Once an agreement is reached, Forrest can prepare all of the necessary documents and file them on your behalf. There is a $150 filing fee that gets paid directly to the court each time you file a modification.

What You Need to Know About “QDROs”

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This is a guest post by Clark Williams of Heltzel Williams, P.C. Clark is a QDRO attorney and also practices business law.  Clark can be reached at 503-585-4422.  Please note that Forrest Collins is not a QDRO attorney and is therefore unable to assist in the drafting of QDRO’s.

So, you are about to be divorced or legally separated and one of the assets to be divided is a retirement plan sponsored by your employer or your spouse’s employer.  Your lawyer says that you need a “QDRO” (pronounced “qua’-dro”) to make the split, and that a specialist is required to draft it.

You ask your lawyer:  “What is a QDRO, and why can’t you do it?”  Those are good questions!  This article is intended to answer those and other basic questions about dividing retirement plans in divorce.

  1. Why can’t the retirement plan be divided or transferred just like a bank account or an investment portfolio?

Because retirement plans are uniquely protected assets under federal law.  Generally speaking, these plans are exempt from all legal process, period.  They are “bullet-proof.”  No creditors can reach them.  You can go thru bankruptcy, lose everything else you own including your house and car, but you won’t lose your retirement plan.  Congress has determined that it is more important for people to reach retirement age with their retirement benefits intact, to support them in retirement with more than just Social Security.

Before 1984, retirement plans were exempt from divorce, too.  But in 1984, Congress made a special exception, allowing retirement plans to be divided between spouses in the context of a divorce or legal separation, if ordered by the divorce court in a “qualified domestic relations order,” or QDRO.

  1. So, what is a QDRO?

A QDRO is a separate court order that is drafted specifically for the retirement plan to be divided.  The QDRO must be very complete about the how the retirement benefit is divided, and it must consistent with the terms of the retirement plan itself.

  1. Why must my lawyer hire a specialist to draft the QDRO?

Because it is very complicated.  Every retirement plan is different.  There are many different types of retirement plans – – profit sharing, 401(k), pension, defined benefit, employee stock ownership plans, deferred compensation and others.  Some plans make lump sum payments, others pay just a monthly payment in retirement years.  And, as stated, the QDRO must be drafted in a way that is consistent with the terms of that retirement plan.  The QDRO cannot require a retirement plan to pay the former spouse more than, or sooner than, or in a form other than, the plan would otherwise pay to the participant.  So drafting the QDRO takes someone who understands pension law, the type of plan being divided and the particular terms of the plan.  Most divorce lawyers don’t have that level of expertise.  Rather, to prepare a QDRO correctly and efficiently, it usually takes an expert who handles retirement plans and QDROs as a regular, every day part of his or her law practice.

  1. Might I need more than one QDRO?

Yes.  Generally, a separate QDRO is required for each retirement plan being divided.  So, for example, if you have a 401(k) plan and your spouse has a pension plan, and if the divorce calls for both retirement plans to be divided, then two separate QDROs will be required, one for each plan.

  1. So, what is the normal process for a QDRO?

First, when the divorce case is concluded, the judgment of dissolution will specify in general terms how the retirement plan is divided, e.g., “wife is entitled to 50% of husband’s 401(k) plan as of the date of the judgment. “  But this general language is not enough for the retirement plan to act on – – the plan needs a QDRO.  So shortly following the judgment, the QDRO lawyer will draft the QDRO specific for that plan and send it to the plan administrator for preapproval.  Most plans have a process for reviewing and approving QDROs in advance of being signed by the judge.  Again, every plan is different, so some plans will require changes that other plans won’t require.  Once pre-approved by the plan administrator, the QDRO lawyer will send a final copy of the QDRO to the divorce lawyer to be signed by the judge.  And once signed by the judge, a court-certified copy of the QDRO is sent back to the plan administrator for final approval and implementation. Then the plan administrator will start the process of segregating the portion of the retirement plan benefit that now belongs to the former spouse.

  1. So how long does this all take?

The usual QDRO process, from start to finish, is three to six months, and that assumes it goes smoothly and everyone cooperates.  The process involves a lot of people – – the two parties, their lawyers, the QDRO lawyer, the plan administrator, and the judge.  Everyone has to do their job timely.  If the process gets hung up anywhere along the way, which often happens, it can take even longer.  So you can’t be in a hurry for it.  If you are the former spouse and you are expecting money out of the QDRO (e.g., you are getting some of your spouse’s 401(k) plan), don’t spend the money before you receive it.

  1. What are the tax aspects?

Like any distribution from a retirement plan, payments to a former spouse pursuant to a QDRO are taxable when received.  Any amount taken will be subject to automatic 20% federal tax withholding, to be credited against the former spouse’s final tax bill for that year.  Oregon law provides for 8% withholding, but that is waivable if the former spouse would rather pay the Oregon taxes with the tax return.  And there is one tax-break: the usual 10% tax penalty for early distributions (under age 59½) from a retirement plan does not apply to a distribution pursuant to a QDRO.  So if the former spouse is needing the money for other reasons (e.g., to pay debts or lawyer fees or to buy a new house), taking a lump sum distribution pursuant to a QDRO will avoid the 10% penalty, even if the distribution is still subject to income tax.   Or if the former spouse would rather defer all taxes, the former spouse can “rollover” any lump sum distribution tax free to an IRA where the funds can remain invested and continue to grow tax free until retirement.

Comparing Divorce vs. Legal Separation

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People often ask what the difference is between legal separation and divorce.  Sometimes they will even ask, “Should I file for divorce or legal separation?”  This is clearly a very personal choice and not a decision someone else can make for you.  With that said, here is what you need to know:

If you are legally separated you are still married.

The main difference between divorce and legal separation is that you are still technically married if you are legally separated.  This means, amongst other things, that you cannot get married to someone else while you are legally separated.  Other than that, legal separation looks very similar to divorce.  In fact, you can make all of the same provisions in a legal separation that you can in a divorce.  For example, you can create a parenting plan, divide pensions, award the home to someone and establish spousal support.  Basically, anything you can do in a divorce you can do in a legal separation.

It is important to understand that the terms of your legal separation will continue to apply if you get divorced unless you both agree to change the terms.  In other words, it is very important that you are comfortable with the terms of the separation now because you probably will not be able to change them later on.

Why get legally separated?

Health Insurance.  The most common reason people get legally separated is because they want to proceed with divorce but they need to be able to maintain health insurance.  Important: Check with your company to make sure that you can cover a legally separated spouse under your health insurance.  Some companies do not allow you to you maintain health insurance for a legally separated spouse.  If you are considering legal separation for health insurance reasons, check with your company first to make sure you are able to maintain coverage.

Religious Reasons.  If you are legally separated you are still married.  Some people find legal separation preferable to divorce based on their faith.

Trial Separation.  Sometimes people will enter into a legal separation as a true trial separation, i.e., they want to see if the marriage can work but want to make sure there are agreements in place about the separation.  This is not a very cost effective way of trying out a separation.  If you really want to try to make your marriage work, you can save yourself a lot in legal fees by separating households and actually trying it out.  Further, the formality of a legal separation combined with working with divorce attorneys may actually make it more likely that your trial separation leads to divorce.

Liability.  In certain situations people are concerned about liability issues related to their spouse.  For example, they may be concerned that their spouse may injure someone in a car wreck and they themselves will be liable.  A legal separation may insulate you from spousal liability to some degree, but as long as you remain married you run the risk of being liable for damage or injury caused by your spouse.

Converting legal separation to divorce.

It is fairly simple and straightforward to convert a legal separation into a divorce.  If you have been separated for less than two years you can simply file a motion asking the court to convert the separation to a divorce.  If one person objects to converting it to a divorce, then a hearing will be set and the divorce will be granted.  If you have been separated for more than two years, it is still easy enough to convert a separation to a divorce but it does require some additional paperwork.  Mediation tends to be a very efficient way to convert a legal separation into a divorce.

General vs. Detailed Parenting Plans

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Parenting plans can be either very detailed or very general.  A detailed parenting plan is just want it sounds like – there will be a lot of detail about exact days, times of parenting exchanges, how summer vacation is scheduled, etc.  A general parenting plan, on the other hand, may just say that one parent will have two overnights per week based on his or her work schedule, and that both parents will work together to figure out holidays on an as-needed basis.  Different states have different requirements about the minimum amount of detail that must be included in a parenting plan.  In Oregon, ORS 107.102 provides that a parenting plan just needs to set out the minimum amount of parenting time that each parent will have.

Pros and cons of each approach.

There are pros and cons to both of these types of parenting plans.  The main “pro” of a general parenting plan is that it builds in a high degree of flexibility, which many parents prefer.  Another benefit is that you don’t have to worry about figuring out all of the different details of your parenting plan; by definition a general parenting plan does not address all of the various details that you would find in a specific plan.  The main “con” of a general parenting plan – and this is significant – is that if you cannot agree on something, what are you going to do?  For example, if your parenting plan says you will “work together” to determine holidays, what will you do if you can’t agree on Labor Day this year?

The main “pro” of a specific parenting plan is that all of the terms are spelled out so you know exactly what the parenting plan is at all times.  This (hopefully) serves to reduce disagreements regarding scheduling because everyone knows what the parenting plan is in every situation.  The main “con” is that a highly detailed approach may be too rigid for some people and actually lead to further disagreements.

Which one is right for you?

There are a few things to consider when deciding whether to use a general or detailed parenting plan.  The first question to answer is what kind of working relationship do you have with the other parent?  Be honest!  Do you work well together?  Do you disagree about whether the sun is shining or not?  If you work well together, a general parenting plan may work well for you.  If you disagree on everything, you probably need a more detailed parenting plan.  If you have a high conflict relationship, then you almost certainly need a detailed parenting plan.

Another thing to consider is how long you have been separated and how things have gone so far.  If you’ve been separated for six months and have established a routine, that should tell you a lot about what type of parenting plan you need.  If you’ve been able to “figure it out”, then a general plan may work well for you.  If you’ve been flexible with each other over time, you probably will continue to be flexible with each other.  If there is constant disagreement about days or times of exchanges, then a specific parenting plan probably makes more sense.

Another thing to consider is that even though co-parenting might be going well right now, it is at least possible that things might be difficult later on.  If that happens, it may be helpful to have a more detailed parenting plan.

You can always be flexible.

You can think of your parenting plan as a “baseline”, i.e., your parenting plan is what you will do unless you reach some different agreement.  Even with the most detailed parenting plan, you can still do something different if both of you agree.  Your parenting plan should address modifications to the parenting plan.  For example, your parenting plan might say that any permanent changes must be agreed to in writing, but one time changes can be agreed to verbally.  Of course, if you cannot agree, then the terms of the parenting plan will determine what is going to happen.

A hybrid approach.

If a general approach is appealing but you are concerned about running into disagreements later on, a hybrid approach may be worth considering.  In a hybrid approach, sometimes called a Plan A/Plan B” approach, you have a general “Plan A” and a more specific “Plan B”.  This approach can apply to your general schedule, your vacation schedule or your holiday schedule (e.g., it might just apply to your vacation schedule and the rest of your parenting plan is a set schedule).

Here is an example of how a hybrid approach might work for holidays:

  • Holidays.  The parents are awarded a “Plan A/Plan B” holiday schedule.
    • General Holiday Schedule. Both parents are desirous of a holiday schedule which provides maximum flexibility to both of them, so that each might have holiday parenting time with the children when they will be best able to take advantage of the time.  It is anticipated that the parents will be able to work together and work out a mutually advantageous schedule on an ad hoc basis.  However, if either party feels that this flexible, non-specific holiday schedule is not working effectively, he or she may unilaterally decide that the Alternate Holiday Schedule detailed below shall go into effect
    • Alternate Holiday Schedule. If the parties fail to reach agreement on a flexible, non-specific holiday plan, or if either party decides such agreement is not working effectively, this alternate general holiday schedule shall go into effect.  Under this alternate schedule the parties shall have holiday parenting time as follows:
      • The terms of this Alternate Holiday Schedule will need to be negotiated and will be inserted here.

 This approach can provide the best of both worlds for co-parents.  It provides a high degree of flexibility but it also takes into account situations where you cannot reach an agreement.  Sometimes people don’t want to take the time to develop a specific Plan B.  However, a specific Plan B is necessary for this type of parenting plan.

So what type of parenting plan should you choose?

The most important thing is to focus on what is best for your children.  A parenting plan that minimizes conflict between co-parents will be better for your kids then one that could contribute to conflict.  With that in mind, if one parent prefers a specific plan and the other prefers a general plan, it probably makes sense to either have a specific or a hybrid type of parenting plan.  If both parents feel like a general parenting plan will work, then it’s probably a safe bet that it will.

Regardless of the parenting plan you choose, be aware that parenting plans are always subject to modification.  If you don’t get it quite right the first time, you can always modify the parenting plan in the future.