Dealing with property division can be a major concern when North Carolina couples decide to divorce. The asset division process that accompanies the end of a marriage can lead to substantial changes in both parties’ standard of living or the loss of certain long-time assets. Some of the most significant types of accounts typically divided in a divorce are retirement funds. While property division is complex for couples of all ages and means, it can be particularly so when a couple has been married for many years or has substantial amounts of property to divide.
While regular IRAs have long been a part of the property division process during a divorce, in an increasing number of cases, inherited IRAs are being used during property division as well. The tax code provides for the distribution of an IRA without a tax penalty during a divorce, once a court order has been issued. However, inherited IRAs are not considered to be covered under the law; while it is an unexplored area, it is becoming a reality in many courtrooms across the country.
Inherited IRAs are often properly not considered part of the marital estate, because inheritances generally remain separate property. This is particularly true of inherited IRAs, which cannot be further supplemented and continue on a set distribution schedule. However, in many cases, one partner may want to use the inherited IRA to settle some other aspect of property division in exchange for another item.
When dealing with property division during a divorce, there are a number of complex issues that can arise. A family law attorney can often help a client negotiate a fair settlement agreement that can be submitted to the court for its approval.