The Hills Bank and Trust Employee Stock Ownership Plan is an ESOP retirement plan sponsored by Hills bank and trust company. Like most ESOPs, this plan provides retirement benefits to employees through ownership in the company’s stock. When a divorce occurs, plan benefits may need to be divided through a Qualified Domestic Relations Order (QDRO). However, due to the unique structure of ESOPs, extra care is required to address stock valuation, distribution timing, and specific plan rules.
In this article, we’ll cover how to divide the Hills Bank and Trust Employee Stock Ownership Plan in a divorce through a QDRO. We’ll walk through what makes ESOPs different, highlight pitfalls to avoid, and give you a practical roadmap for handling this complex process the right way.
Here are the available details specific to this retirement plan:
Even though some data points are currently unavailable, it’s still possible to move forward with a QDRO. A good QDRO professional will work with the plan administrator to obtain everything needed for accuracy.
Unlike traditional 401(k) or pension plans, the Hills Bank and Trust Employee Stock Ownership Plan involves company stock. This stock is part of the plan participant’s retirement account, and it comes with certain rules that affect valuation, diversification timing, and eventual payouts.
ESOP plans value the stock periodically—usually annually—based on private, third-party appraisals. This means that if a QDRO instructs a transfer based on a stock value, it should align with the most recent valuation date. Choosing the wrong date can lead to unfair or unintended distributions during divorce proceedings.
Distributions from ESOPs are often limited to retirement, termination, death, or disability. In some cases, distributions under a QDRO will follow the standard distribution event schedule unless explicitly allowed earlier by the plan. That means an Alternate Payee (ex-spouse) may not be able to liquidate their share immediately upon divorce, depending on the distribution rules of the Hills Bank and Trust Employee Stock Ownership Plan.
In closely held companies, like many ESOP sponsors, when an alternate payee receives shares of company stock, the company may be obligated to buy them back under a “put option.” This is important in divorce because you need to know whether the ex-spouse will receive stock or the cash value of the stock—and when they can expect that payment.
Participants reaching a certain age and years of service may be entitled to diversify part of their ESOP holdings into non-employer investments. However, this typically only applies to employees themselves—not alternate payees. If diversification rights are triggered during the divorce timeline, it may affect valuation or distribution strategies in the QDRO.
The language in your QDRO must define whether the alternate payee is receiving stock itself or the value of the stock. If this is not clearly stated, delays and confusion can occur. Our team always contacts the plan administrator to confirm the default treatment before we draft the final document.
If the alternate payee is receiving a future payout, you need provisions to outline what happens if that value changes between the divorce and the eventual distribution. Because stock values can fluctuate, it’s common to assign either a fixed number of shares or a percentage value using a known valuation date.
Plan administrators for ESOPs operate differently. They may not issue early lump sum payments, and they almost certainly won’t allow in-service distributions without a triggering event. Forcing early payouts through a QDRO when the plan doesn’t allow them can lead to rejection of your order.
Because ESOPs have company-specific rules and valuation methods, it’s difficult to handle on your own. At PeacockQDROs, we’ve handled many QDROs—including those for ESOPs like the Hills Bank and Trust Employee Stock Ownership Plan. We know what to look for, what language to use, and how to work with the plan administrator to get it done right.
We help our clients gather missing documents by coordinating directly with the employer or plan administrator whenever possible.
At PeacockQDROs, we’ve completed many QDROs from start to finish. That means we don’t just draft the order and leave you to figure out the rest. We handle the drafting, court filing, submission to the plan, and any required follow-up. That’s what sets us apart from firms that only prepare the paperwork and hand it off to you.
We maintain near-perfect reviews and pride ourselves on a track record of doing things the right way. We’ve worked with plans just like the Hills Bank and Trust Employee Stock Ownership Plan and understand how to incorporate its ESOP-specific details into your divorce QDRO.
Want to learn more? Visit our main QDRO page, check out common QDRO mistakes, or read about timing factors involved.
If your divorce was in California, New York, New Jersey, Connecticut, Kansas, Missouri, Iowa, or North Dakota, and you have questions about qualified domestic relations orders or dividing retirement assets like the Hills Bank and Trust Employee Stock Ownership Plan, contact PeacockQDROs. We focus on QDROs and have successfully processed many orders from start to finish.
Get the answers you need—explore our QDRO resources or reach out for personalized help if you’re in one of our service states.
Willie has handled hundreds of QDROs, been named as a stipulated or court-appointed expert in hundreds of orders, testified as an expert witness on QDROs and state government pension survivor benefits, and taught CLEs on QDROs, legal ethics, and military pensions. He is a three-time ABA award-winning legal author and secured a victory before the North Dakota Supreme Court. Full bio →
