Tinero, Aharonov and Associates Tinero, Aharonov and Associates A Family Law Practice, LLP

Property division and the health savings account

Once a California couple makes the decision to divorce, it is time for them to also decide how assets should be divided. Sometimes, this is a relatively easy process, and the couple is able to agree on a property division plan according to the state's community property laws. Other times, there are multiple factors that must be considered and assistance is required in order to make informed decisions.

Common elements to be considered in the property division plan are investment accounts, retirement accounts, bank accounts, real estate and other assets of significant value owned by the couple. Each asset should be analyzed and a determination made as to which party should receive what portion of the asset. In doing so, it is important to consider both the current value of the asset and its future value along with any tax implications that may arise.

In addition to these typical assets, some individuals also have a Health Savings Account, or HSA. The HSA is an account in which the individual deposits funds to be used for health care expenses. This account is designed to assist those whose health insurance policy has a high deductible. There are limits on the yearly amount that an individual can place in this type of account, and deposits are generally tax-exempt.

Funds placed in a HAS are not required to be used within a given time period; therefore, some of these accounts can have a significant monetary value. They are treated similarly to IRAs in distribution and tax status. As such, these accounts should also be taken into consideration as the California couple makes property division decisions.

Source: news.morningstar.com, "Handling HSAs After Death or Divorce", Helen Modly and Tommie Monez, June 15, 2017

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