Going through a marital breakup in Massachusetts is no doubt a difficult feat both financially and emotionally. From a financial standpoint, figuring out how to divide major assets, such as the home or a retirement plan, can especially be daunting. A particularly tricky area of divorce property division today is the division of inherited individual retirement accounts, or IRAs.
Dividing an inherited IRA is quite a new phenomenon with major implications. For one, inherited IRAs — just like traditional IRAs — are oftentimes large assets and can therefore be major bargaining chips between divorcing couples. In addition, it remains unclear whether inherited IRAs can even technically undergo division during marital breakups.
The reality is that current divorce and tax laws have not addressed the idea of dividing an inherited IRA, so no one has officially ruled on the matter. However, courts have split these assets during divorce proceedings. After all, even though an inherited IRA may be in only one spouse’s name, it is deemed marital property if the married couple contributed to the retirement account with their marital earnings.
The division of inherited IRAs and other large assets can understandably be confusing and even frustrating due to its inherent complexity. However, a family law attorney in Massachusetts can provide the guidance needed to navigate this aspect of a divorce proceeding, whether a spouse is dealing with it outside of court or at divorce trial. The attorney’s ultimate goal is to ensure that the spouse’s best interests are protected long term.