Divorce can be an emotional and stressful experience. The process requires both parties make a number of decisions relating to their union, including custody, support and dividing assets. When a couple thinks about splitting up their assets, they usually consider items like houses, cars, furniture and savings accounts. These assets can usually be divided relatively easily with both spouses taking a portion. However, if a couple has put much of their savings into an Individual Retirement account, it can be a bit trickier.
These accounts, known as Individual Retirement Accounts (IRAs), are a great way for couples to save money for their retirement. Dividing them requires both an understanding of divorce laws as well as tax laws as the process affects both. That said, the IRS usually allows divorce-related transfers to pass tax-free.
Often a couple will decide to divide their IRA equally between them. If they do so, they must obtain a court order that reflects this agreement. The order must state that the account will be divided as well as give explicit instructions for exactly how they would like to divide it.
There are a couple of ways to divide an IRA. The most common and easiest way involves a direct transfer where the IRA owner spouse requires the trustee to transfer half the funds to the trustee of a new IRA held in the name of the other spouse. Both spouses will then control an equal portion of the original wealth. The other way is by transferring half the account to another account owned by the same spouse who will then give over ownership to that account to their former spouse. This way is slightly more complex and rarely offers any advantages over the first method.
Divorce is a complicated matter and requires that the couple make a number of important decisions. For the guidance and advice you need, contact the experienced Florida divorce attorneys at the Law Office of K. Dean Kantaras.