Warmbrodt Associates, PLLC - Family Law
Board Certified Logo

To learn more about what it means to be Board Certified, Click here

Warmbrodt Associates, PLLC - Family Law
Board Certified Logo

To learn more about what it means to be Board Certified, Click here

Toll Free: 800-611-2638
Phone: 972-509-2725
Pay Now

Let Us Worry So You Don't Have To

Property division involving inherited IRAs gains attention

The dissolution of a marriage can be financially challenging no matter how long or short of a period two people have been married. One of the most contentious aspects of a divorce in Texas and elsewhere is property division. A particular area of property division that has especially sparked a lot of discussion lately is the division of an individual retirement account, or IRA, that has been inherited.

The division of inherited IRAs is a relatively new phenomenon — one that might point to a growing trend in divorce agreements in the future. This is especially true considering the brand-new alimony rules slated to take effect next year. These retirement accounts might end up playing a much larger role in marital dissolution settlements because their pre-tax dollars may come in handy when making up for the alimony deduction that will soon be eliminated.

Aside from the new tax law’s effect on the division of inherited IRAs, the division of an inherited IRA is significant, in that these types of retirement accounts have become major assets and thus bigger bargaining chips during divorces. Another reason that inherited IRAs have been drawing so much attention is that questions remain as to whether these types of assets can actually be divided in the first place during a divorce proceeding. Neither divorce regulations nor the current tax code have considered this possibility, so there have not been any official rulings regarding this.

Nonetheless, courts across the country have been dividing inherited IRAs just as they do other types of marital assets. Of course, the best situation when it comes to property division involving IRAs and other types of assets is for both spouses to arrive at a settlement agreement through negotiation or mediation, rather than going to trial. Still, an attorney in Texas can provide the guidance needed in either scenario to ensure that a spouse’s rights and best interests are protected during each stage of the divorce proceeding.

FindLaw Network