Tax-free treatment of funds
Transfers of HSA funds incident to divorce are generally not considered taxable distributions as long as they are made as part of a divorce or separation instrument. In other words, your spouse still gets the tax-free treatment of HSA assets
During (transfer) and
Post-transfer (withdrawals for qualified medical expenses)
If this is your situation, contact your administrator to request a transfer of the account to your spouse's name.
HSA rules still apply
Outside of the transfer rules above, all of the same rules apply.
An account holder can not use their HSA to cover their ex-spouse's out-of-medical expenses.
Account holders must be eligible (i.e., HSA-eligible plan coverage) to make new or additional contributions to the HSA. This is true for ex-spouses that receive transferred HSA funds as a part of divorce proceedings.
Dependent status of children
As decisions are made about custody and tax filing, you might be wondering about the dependent status of your kids.
IRS Publication 969 (2023), Health Savings Accounts and Other Tax-Favored Health Plans.
For this purpose, a child of parents that are divorced, separated, or living apart for the last six months of the calendar year is treated as the dependent of both parents whether or not the custodial parent releases the claim to the child’s exemption.
According to the IRS (above), children of parents divorced, separated, or living apart for the last six months of the calendar year are treated as dependents—even if a custodial parent releases the claim to the child’s exemption.