Filing for divorce involves a variety of challenges. For some couples it may be a custody issue, while for others it the distribution of marital assets. Marital assets often involve property, businesses and possessions, but also include such assets as pensions, stocks, savings and an Individual Retirement Account (IRA).
Careful how you divide that IRA
A doctor made national news earlier this year when he ended up in Tax Court. While his intention to give money to his ex were not bad, the doctor’s mistake was failing to pay taxes on $140,000 that he withdrew from his IRA and put in his ex-wife’s checking account.
There are only to transfer that money to an ex-spouse without paying taxes:
- Change the name of the IRA to the ex-spouse’s name.
- Transfer funds from your IRA to one in your ex-spouse’s name.
An attorney will outline how assets are divided
It is always advisable to work with a family law attorney when estates need to be divided. The divorce decree will carefully outline all the different arrangements, including specifics of how an IRA is divided. If the IRA has assets that fluctuate in value, the decree may even indicate the timing for the most advantageous transfer of funds. Attorneys will also indicate who is responsible to pay for any fees incurred during the transfer.
Attorney can also address other individual matters unique to the arrangement, whether it is a complex high asset or high conflict divorce, or one that is more straightforward with no issues involving custody or parenting plans.