Use of Exempt Assets to Pay Marital Obligations

In addition to substantial tax savings/benefits which accompany IRAs, 401ks and other qualified retirement plans; they are often exempt from creditors claims making them a useful asset protection tool. One creditor who is not hindered by these general exemptions, however; is a former spouse to whom a party owes alimony, support or attorney's fees.

On the contrary, the Court may use an IRA to satisfy obligations imposed under Chapter 61 including an alimony obligation or arrearage (and presumably attorney’s fees) despite the fact that this type of account is normally exempt from creditors. “In a Chapter 61 contempt proceeding a trial court may properly look to a former spouse's individual retirement account to determine whether that spouse has the ability to pay a purge amount in a contempt order. Contrary to appellant's argument, the section 222.21(2)(a), Florida Statutes (1995), exemption of an IRA account from “all claims of creditors” does not shield IRA assets from a court order to pay Chapter 61 obligations….Under Chapter 61 and Bowen, an IRA is not a safe haven where a former spouse can hoard assets while, at the same time, argue that he does not have the present ability to pay a purge amount in a contempt order arising from the non-payment of obligations due under the chapter. Because a person can obtain access to funds in an IRA account, a trial court may properly look to that account as a source of funds to satisfy a purge amount in a contempt order.” Siegel v. Siegel, 700 So.2d 414, 415 (Fla. 4th DCA 1997 emphasis added).