Property division is one of the most challenging aspects of the dissolution of a marriage in Florida. This is the case no matter how many assets a couple may have. One asset that may cause confusion during the divorce process is the health savings account, or HSA.
An HSA is a custodial account that allows one to make a tax-deductible contribution that does not exceed a certain annual amount. The benefit of such an account is that it does not feature any income restrictions when it comes to making a contribution. This type of account is used in tandem with a high-deductible insurance plan for health care.
Dividing this type of account is especially paramount if the account features a large sum of money, but even smaller amounts can spark disputes between divorcing spouses. Even though dividing an HSA may seem confusing initially, the reality is that it is handled in the same way that an IRA is during divorce. The divorce agreement can spell out how interest in a particular HSA will be transferred between the spouses. Fortunately, according to IRS guidelines, either parent can use funds from an HSA to cover the eligible expenses of their children. It does not matter which parent has physical custody of them or which parent has decided to claim the children as dependents when filing his or her income taxes.
Divorce is never an easy process due to the emotional and financial implications of this type of legal proceeding. However, an attorney in Florida can provide guidance during such a process to ensure that one gets one’s fair share of assets. This may require going to court if alternatives to traditional litigation, such as divorce mediation or collaborative divorce, are ineffective for achieving a personally satisfactory divorce settlement.
Source: morningstar.com, “Handling HSAs After Death or Divorce“, Helen Modly, June 15, 2017
