One of my neighbors asked what would happen if he opened IRA's for his teenage children who work for him in a family business should they marry and later divorce?

Should they have a pre-nuptial?

What about community property states?

Dick

IRA's are always individually owned. If they divorce, they keep the IRA's in their name.

Small addition:

An IRA can be divided by a divorce or separation instrument. The IRA will not serve as a "shelter" from the divorce.

Interesting. I was not aware of that, but I now see it in the regs. Would a pre-nup really provide a bullet-proof protection?

A person can waive marital or support rights to an IRA on account of separation or divorce by signing of a prenuptual agreement valid under state law in which such rights are waived. These rights can also be waived after the parties are married. In a community property state each party has the right to 50% of all property acquired during the marriage.