Instructions are to give spouse IRA under IRC 1040, which talks about pecuniary bequest.
Does this mean that the spouse gets the assets now? Or after the IRA owner dies?
This is different from a non-taxable transfer due to divorce -right?

I'd interpret it as on death

"If the executor of the estate of any decedent satisfies the right of any person to receive a pecuniary bequest"

http://www4.law.cornell.edu/uscode/26/usc_...-000-notes.html

This type of bequest is usually seen with some rather complex estate planning.

Perhaps you should define the situation more clearly e,g. is the owner alive or deceased, are the instructions referred to in the will or a separate document?
If the IRA owner is alive, payments transferred to the spouse will be a taxable distribution to the owner. Why dont you ask the attorney for the owner or the estate what is meant by pecuniary bequest under IRC 1040 which was never intended for IRA distributions?