Supreme Court News: NO Inherited IRA Bankruptcy Protection
A case we brought to your attention in early 2012 from the Seventh Circuit Court, In re Brandon C. Clark, made it all the way to the Supreme Court in December.
On June 12th the Court heard that case and the decision is final…the Justices unanimously held that beneficiaries of an inherited IRA do NOT have the same creditor protection as an original IRA owner in a bankruptcy proceeding calling the inherited funds “…a pot of money that can be freely used for current consumption.”
What does this mean for your multi-generational planning strategy? The reality is, from a planning perspective, nothing has really changed.
Candidly, most IRA owners will not be concerned about this development. However, if you have IRA beneficiaries you genuinely believe will be facing bankruptcy proceedings after inheriting the IRA, your retirement distribution specialist can go over your concerns and discuss some options that fit your planning goals.
Source: Thomson Reuters