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
Recent case serves as a reminder that both tax and bankruptcy law implications should be considered

In 2012, several judicial opinions have reminded directors, officers and “responsible persons” that personal liability may be imposed for business taxes. See our alert from June 20, 2012. Responsible persons are reminded again that not only will authorities impose liability for unpaid taxes of a business on individuals but that the imposition of such taxes may not be dischargeable in bankruptcy.

Filed under:
USA, Michigan, Insolvency & Restructuring, Litigation, Tax, Dykema Gossett PLLC, Bankruptcy, Excise, US Code, United States bankruptcy court
Authors:
Wayne D. Roberts , Steven E. Grob , William C. Lentine , Anthony Ilardi, Jr.
Location:
USA
Firm:
Dykema Gossett PLLC