How to Split an IRA in a Divorce Proceeding
The division of assets in a divorce case presents a challenge for many couples. One of the more complex issues involves how to split an IRA in a divorce proceeding. There are a number of different strategies that are employed to divide an IRA depending on the circumstances of the parties in a particular divorce case.
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Things You'll Need
- IRA valuation statement for date of marriage
- IRA valuation statement for date of separation
- Standard settlement agreement
- Special settlement agreement for distribution of IRA at a later date
Instructions
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Calculate the amount of the increase in value of the IRA during the course of the marriage by determining the value of the IRA on the date of the marriage as well as on the date you separated from your spouse. The difference in value between these two dates is the amount that is subject to division as part of the divorce.
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Determine what course of division is most suitable to your circumstances. The owner of the IRA can make a cash payment for half the increased value of the IRA to the other spouse. The IRA owner can take on responsibility for additional debt in the amount of half the increased value. Both spouses can enter into a supplemental IRA settlement agreement in which the non-owner will receive an appropriate percentage of the IRA at a future date when distributions are made during retirement.
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Draft an appropriate settlement agreement to reflect the settlement made in regard to the distribution of the IRA proceeds. If the IRA proceeds will be distributed at a future date, a supplemental agreement setting forth this plan also needs to be drafted.
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Tips & Warnings
The distribution of assets and debts as part of a divorce settlement is a complicated and sometimes emotional matter. Therefore, in most cases individuals seeking a divorce are best served by obtaining representation from qualified legal counsel. Both the state and local bar associations maintain directories of attorneys in different practice areas, including lawyers who practice family and divorce law.
