Money, or the love of it, may or may not be the root of all evil: however, there is no doubt that it can cause many an argument. When California residents divorce, an individual retirement account may be part of the property division. What may start off as an amicable agreement could potentially end up as a bone of contention further down the line. A woman from an unknown state was divorced from her husband about a year ago, and she is now questioning whether she should have handled things differently regarding the division of a shared individual retirement account with her ex-husband.
The divorce itself was amicable; she still sees her ex-husband occasionally at family gatherings, and things between them are friendly, if a little awkward. During the divorce, the husband did not want to split the IRA that he shared with his wife, as he had been saving this money for a considerable time, and it was close to reaching $1 million. Now, a year later, the account is in excess of that figure, yet her ex-husband has said nothing further about splitting the funds with her.
There are a number of factors that will affect the outcome of a situation like this. One major consideration is whether the divorce takes place in a community property state, such as California. There may be substantial penalties for withdrawing the funds before maturity; however, with the right advice, it may be possible to do so in a way that reduces the liability.
It may be that this woman’s ex-husband has no malicious motive in failing to address the issue and that he intends to honor whatever agreement was reached regarding property division during the divorce. However, it is not enough to simply rely on remaining on good terms with one’s former spouse and trusting his or her honesty. California residents who find themselves in a similar position would be best advised to seek advice appropriate to their own circumstances.
Source: marketwatch.com, “How can I get my hands on half of my ex-husband’s $1 million IRA?“, Quentin Fottrell, March 1, 2017