Landmark Supreme Court Decision Exposes Inherited IRAs To Creditors In Bankruptcy

The U.S. Supreme Court held in Clark v. Rameker that inherited IRAs are not “retirement funds” within the meaning of 11 U.S.C. §522(b)(3)(c), a federal bankruptcy law. This means inherited IRAs are available to satisfy creditors’ claims. How the SCOTUS Reached Its Decision The Court relied upon three factors to differentiate an inherited IRA from a participant-owned IRA. The three factors include: (1) the beneficiary of an inherited IRA cannot make additional contributions to the account, while an IRA owner can, (2) the beneficiary of an inherited IRA must take required minimum distributions from the account regardless of how...

16 September

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Creative Estate Planning for Clients No Longer Subject to the Federal Estate Tax

Posted by KarenLewis

in Bobby's Blog

When Congress passed the American Taxpayer Relief Act (ATRA), roughly 99.8 percent of U.S. taxpayers became shielded from the federal estate tax (aka the "death tax"). So what does this mean for estate planning? Post-ATRA estate planning appears dramatically different than in years past. For the first time in U.S. history there is a “permanent”, inflation-adjusted and portable exemption amount that essentially excludes the extremely wealthy, from gift, estate and generation-skipping transfer (GST) tax. This is extremely important since, for the past decade, there was a great deal of uncertainty in estate planning. Prior to ATRA, there had been a phased-in...