U.S. Supreme Court rules inherited IRAs not exempt from creditors’ claims in bankruptcy

The recent unanimous decision of the United States Supreme Court (the “Court”) in Clark v. Rameker, 573 U.S. _____ (2014) held that inherited IRAs do not constitute “retirement funds” within the meaning of section 522(b)(3)(C) of the United States Bankruptcy Code. Consequently, inherited IRAs are not exempt from creditor claims in bankruptcy proceedings. The Court’s holding highlights the importance of sound financial and estate planning to protect inherited retirement plan assets from claims of a beneficiary’s creditors.

Background

Filed under:
USA, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, Dykema Gossett PLLC, Bankruptcy, Internal Revenue Code (USA), Supreme Court of the United States
Authors:
David P. Dunaway , Michael G. Cumming , William C. Lentine
Location:
USA
Firm:
Dykema Gossett PLLC