If you have an inherited IRA you need to meet with your professionals to be sure you understand whether there are any steps you can take to protect your inherited IRA from creditors.
Charlotte, NC (PRWEB) June 27, 2014
Jim Hitt, CEO of American IRA-a national provider of Self-Directed IRA services-warns "If you have an inherited IRA and you are in any type of situation in which a creditor may bring a claim against you; you need to meet with your professionals to be sure you understand whether there are any steps you can take to protect your inherited IRA from creditor claims."
According to Scotusblog.com on 6-12-2014, a Supreme Court ruling announced that inherited IRAs do not enjoy the same bankruptcy protection as other IRAs.
This is going to be a big deal as aging baby boomers reach their will maturity dates, and their IRAs pass to their adult children and grandchildren.
The case arose from a claim against one Heidi Heffron-Clark. Mrs. Clark had inherited a sizable IRA in 2001.
Mr. and Mrs. Clark had started a pizza shop, which went under – like a lot of small businesses – in 2009. The restaurant’s closure resulted in a broken lease, and the landlord had a claim of $74,000. As a result of the business failure, the family declared bankruptcy in 2010.
Normally, IRAs are shielded against attachment by creditors – up to balances of $1.3 million under federal law. Some states provide even more protection. However, when Heffron-Clark’s creditors learned about the IRA Mrs. Clark inherited, they pounced.
Sonia Sotomayor, writing the court’s decision, held that “The text and purpose of the Bankruptcy Code make clear that funds held in inherited IRAs are not "retirement funds" within the meaning of § 522(b)(3)(C)'s bankruptcy exemption.”
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