The Moneyist: ‘He owed a lot of back taxes.’ My ex-husband forgot to sign paperwork to split a sizable investment account — then he died. Can his estate claim that money?

‘The investment company says the account is now all mine. Is that true?’ Read More...

Dear Moneyist,

I divorced a little over a year ago, and my ex-husband died suddenly. One of our investment accounts was ordered to be split $30,000/$60,000, as per our divorce agreement. I signed my paperwork, but he never got around to it.

Also see: ‘My husband’s kids hate me and refused to come to our wedding, yet he is leaving them all his property.’ How can I negotiate to secure my future?

The investment company says the account is now all mine. Is that true? I believe he owed a lot of back taxes and other bills, and I know that his estate does not have the money to pay. Will they/can they come after this money that is now mine?

Ex-wife

Dear Ex-wife,

Your question has two parts: can his estate come after you for back taxes and can his estate claim the money in your investment account. The investment company says the money is all yours. If the account was in your name to begin with, I agree with their statement — up to a point.

If your divorce decree states that you are to split that account, that trumps the name on the account. A court ruling typically takes precedence over whose name is on the account. Your attorney should be able to go through the paperwork and see what was agreed on paper.

There is a statute of limitations on divorce decree settlements, which vary dramatically by state. In Arizona, for example, it’s five years. In Wisconsin, it’s 20 years. In Mississippi, it’s seven years. These issues usually come up around issues of unpaid child support or alimony.

Also see: As a baby boomer, I didn’t grow up with this culture of entitlement — do I have to leave my estate to my children or spouse?

His taxes are an equally tricky proposition. If you filed your taxes jointly, the Internal Revenue Service holds you both responsible. If you filed separately, the IRS can target your husband’s estate for up to six years after filing. His estate’s executor/administrator would have to deal with this.

In that case, the executor/administrator may look into the divorce decree, if unsigned paperwork raises alarm bells. So, yes, they can come after you for the money, assuming that you don’t contact the estate. Whether or not they will come knocking on your door, however, is anyone’s guess.

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