Bankruptcy Protection for Inherited IRAs

Posted on 04.14.14

Bankruptcy Protection for Inherited IRAs

Money Umbrella

The Supreme Court has agreed to decide whether bankruptcy protection applies to inherited IRAs. There is a conflict among some lower courts as to whether a debtor's inherited IRA may qualify for an exemption under the bankruptcy laws. Some courts have held that the exemption for retirement funds does not apply to inherited accounts because they are not held for retirement. Other courts disagree, finding that the exemption applies because the funds were originally for retirement of the person from whom they were inherited. Those concerned that the Supreme Court may hold against the exemption may want to explore using trust arrangements for IRA funds to achieve asset protection.

Sources: Checkpoint; Image, Jon G. Brooks

The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

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