IRA and Post-Nuptial Agreement

[Guest drdcreek]

Here is the situation. Pending divorce and parties want to reconcile. Wife wants husband to give her control over part of IRA by rolling it over to a new IRA and making her the owner. If they were divorcing, and she was becoming his former spouse, this seems to be ok. But how do you do it if they are not divorcing? Other ideas on protecting wife's interest in IRA?

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drdcreek

drdcreek@yahoo.com

[John G]

Not possible. The I in IRA stands for individual. Divorce court orders can force IRA funds to be shifted, but I believe this triggers tax obligations, and I doubt that a judge can supercede IRS regs. It doesn't sound like this marriage is going anywhere, so perhaps it will end up eventually as a court order. If the $$ are not major, they can commit themselves to a year by year ($2000) plan to contribute to the "short changed" spouse.

You can also make wife the beneficiary of the husbands IRA, but that designation can be readily changed if the account is transfered. Others may be able to tell you if any IRA custodian can require the wifes signature to change the custodial designation. I know that is true for some type of corporate plans. My suspicion is that the transfer loophole allows the money to move around at the sole discretion of the IRA owner, so there may be little protection of a spouse.

I am stretching to answer this Q and the above is based upon limited anecdotal experiences a few years ago. I invite additional comments from this sites professionals.

[This message has been edited by John G (edited 06-23-99).]