When you privately agree (do not litigate) the terms of your divorce in North Carolina (and possibly your state as well), you and your spouse can document your agreement with a separation agreement, a consent order or you can incorporate your separation agreement into a court order.

A separation agreement is a private contract between the parties rather than a court order which is typically a matter of public record. (I want to note for you out there who are new to divorce that a “separation agreement” is the document name given to your private settlement agreement in North Carolina.) In North Carolina, the court does not have to review or approve the parties' separation agreement. If one party does not abide by the terms of the contract, the other party would have to sue that party for breach of contract in a civil court.

On the other hand, a consent order is when a judge signs an agreement that is usually negotiated outside of court. A separation agreement can be incorporated into a divorce judgment, which turns the separation agreement into a court order. When a judge signs a court order, you can enforce the order by filing a motion of contempt. You can file a motion for modification if you or your ex wants to modify or change something in the consent order. (A judge will have to approve that motion.) Finally, a consent order is a matter of public record, so the terms are not necessarily private.

If you are dividing employer retirements plan assets such as a pension or 401(k) plan, you will need to have a Qualified Domestic Relations Order (a QDRO) if it is a private employer plan. (Government plans have their own names for this type of order but the purpose is the same so for purposes of this article, I will generically call all these types of orders QDROs.)

When you have a QDRO dividing retirement plan assets and it is presented to the judge for approval, the judge will want to see the terms that the spouses negotiated and compare those terms to the QDRO. Because a private separation agreement is not a court order, the judge would have nothing to compare the QDRO to, and the judge would not be able to sign the QDRO.

This is just one more complication when dividing retirement plan assets. Because QDROs add a lot of complexity and related costs to divorce, when I work with couples, I try, if possible, to have each spouse keep all his or her employer retirement plan assets by allocating other assets in the division. It is one of the ways I provide my clients with a financially smart divorce. However, some couples have no choice but to split the retirement plan assets because there is no other way to give each spouse 50% of the marital assets without dividing up the retirement plan.

One final note. There can also be unexpected pitfalls related to incorporating a separation agreement into a divorce judgment. If you took your spouse back to court over certain specific issues, those terms might not be enforceable under NC law or the judge could overrule your agreement. An attorney should always be consulted to make sure the powers of the court and the laws of North Carolina are addressed. It is possible to incorporate only parts of their agreement through a partial merger.

You can find other articles on my website on QDROs at the following links:

https://therightdivorcesolution.com/articles/complications-with-dividing-401-k-plans-in-divorce

https://therightdivorcesolution.com/articles/not-getting-a-qdro-right-can-be-disastrous

https://therightdivorcesolution.com/articles/preparing-and-paying-for-qdros-in-divorce

https://therightdivorcesolution.com/articles/common-qualified-domestic-relations-order-pitfalls