IL Teacher Retired Divorced In Arizona
Your client worked as a teacher in the Chicago Public Schools, CPS and participated in the CTPF, or in another Illinois school district and participated in the TRS. Her and her spouse moved to Arizona and some time thereafter, one of them filed for divorce.
The Arizona court has personal jurisdiction over both of them and subject matter jurisdiction over all issues arising out of their marriage, including the distribution of marital assets. The court grants your client's spouse 50% of your client's Chicago or Illinois public pension, TRS or CTPF.
Since you are representing the Plan member/participant, you are interested in providing as little to the other spouse as possible. You do not want the other spouse to get 50% of the entire pension, at most 50% of the marital portion.
The marital portion is most commonly divided using the coverture formula. The coverture formula is the amount of benefit at retirement multiplied by a fraction, the numerator of which is time/credit participating in the Plan during the marriage, the denominator being the total time/credit participating in the Plan. This amounts to the marital portion.
However, there is no prohibition on defining the marital portion as what has accrued from the date of marriage until the date of divorce, period, without granting the alternate payee any benefit of participation in the Plan before or after the marriage. It would be wise to include language specifying that the coverture formula will not apply, as this method is becoming default, any ambivelence in the drafted language is likely to be construed in favor of using the coverture formula (Hunt formula in Illinois).
Furthermore, there is no requirement that the alternate payee benefit from any increases. The Judgment could provide so, specifying that only the member will benefit from COLA.
Now, the Arizona court will not be able to enter an enforceable Qualified Illinois Domestic Relations Order (QILDRO), as the TRS, CTPF and other Illinois public pensions are subject to Illinois law, not ERISA. Illinois statute inconveniently states that an Illinois Order (QILDRO) is the only way to divide the Plans. Therefore, it is wise to include a provision in your divorce decree or judgment, or in a separate order that the parties subject themselves to Illinois jurisdiction for the purpose needed and will cooperate with the Illinois court, Plan Administrator (and perhaps, attorney), to have a QILDRO implemented.
On the Illinois side, we will have to enroll, sometimes referred to as "register," the Arizona (Maricopa or other county) Judgment in Illinois. Contemporaneously where possible, we will move the court for entry of a QILDRO.
The clearer the QILDRO provisions in the Arizona Judgment, the better. As you may have guessed, it is adventagous to contact an Illinois attorney well versed in foreign Judgments and QILDRO's prior to finalizing the Arizona divorce decree.