Ask the Experts!
The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.
Question: My client is getting divorced, and one of couple’s most valuable assets is a nonqualified annuity titled in the name of the wife. Can part of that annuity be transferred to the husband without an income tax result?
Answer: Yes.
Internal Revenue Code Section 1041 says that annuities—or any other assets, for that matter—can be transferred between ex-spouses pursuant to a divorce without an income tax result.
A transfer is considered to be pursuant to a divorce if it
· occurs within 1 year after the date on which the marriage ends, or
· is related to the dissolution of the marriage.
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