Home » Financial Articles » Pilots Game Texas Divorce Laws, Playing Continental for Pension Funds
Pilots Game Texas Divorce Laws, Playing Continental for Pension Funds
A group of airline pilots recently used the system for early pension payment. Despite the plan administrator's objections, a Texas court ruled that this was completely legal.
January 10, 2010 /Financial PR News/ -- Pilots Game Texas Divorce Laws, Playing Continental for Pension Funds
Article provided by Richard T. Bell & Associates, P.C.
Visit us at www.rtbell-law.com
There has not been much good news on the subject of retirement benefits lately, especially for those who foresee relying on those benefits when the time comes. At Continental Airlines, a group of senior pilots weighed their options and decided to get their retirement benefits before the money disappeared -- without retiring.
The Plan
Each pilot allegedly involved in the scheme obtained a divorce, along with a domestic relations order giving 100 percent of the pilot's retirement benefits to the former spouse.
Under Texas law, a qualified domestic relations order (QDRO) is the only legal way to redirect retirement benefits from a plan member to an "alternate payee" during a divorce. A domestic relations order is given by the court; it is then left to the plan administrator to verify the order. In this case, after reviewing the orders, Continental's pension plan administrator confirmed the pilots' court orders as valid. When the ex-spouses requested lump sum payouts, millions of dollars in benefits were disbursed.
After the retirement benefits were paid, however, none of the pilots moved out of their homes and some of them even turned around and remarried their former spouses. Eventually, the pension plan administrator realized what was going on and immediately stopped all action on similar QDROs.
The administrator also sued the pilots, asking that all payments be refunded.
Despite the apparent motives at play, a Texas court ruled that the plan administrator could not deny payment based on added criteria and dismissed the lawsuit. In this case, the "added criteria" pertained to whether the divorces and domestic relations orders were made in good faith.
In other words, regardless of the motives involved, Continental's plan administrator could only verify domestic relations orders based on facts that were officially relevant. Whether or not the pilots were being honest -- as long as they were proceeding within the law -- there was nothing to be done.
Division of Assets in a Texas Divorce
Texas is a community property state. This means that, with the exception of separate property, all earnings and everything acquired during the marriage are typically divided equally during a divorce. Debt also falls under the community property umbrella in Texas, and spouses are equally responsible for its repayment.
In other states, equitable distribution of property may give a higher percentage of property to the spouse who earns more.
Under Texas law, separate property commonly includes:
-Gifts and inheritances given to a single spouse
-Personal injury awards
-Property purchased with separate funds
-Property owned prior to marriage
Other property, such as an individually owned business, may be considered either community property or separate property. This depends on a variety of factors including when the business was incorporated, the characterization of the funds used to start the business, and whether or not the other spouse was involved in its maintenance or assisted with it in another way.
How a Lawyer Can Help
The Texas pilots' plan was an extreme way to use the property distribution laws to their advantage. If you are going through a divorce and have questions about how to ethically and effectively work within Texas' property distribution laws, however, it is best to speak with an experienced attorney.
Article provided by Richard T. Bell & Associates, P.C.
Visit us at www.rtbell-law.com
---
Press release service and press release distribution provided by http://www.24-7pressrelease.com |
|
FURTHER RELATED RESOURCES:
|
Press Release Contact Information:
Findlaw PR
|
|
|
|
|
|
|
Advertise With Us |
About Us |
Contact Us