In a sweeping decision in Clark v. Rameker, the U.S. Supreme Court held that funds in an inherited IRA are not protected in bankruptcy. The Court’s analysis focused on key legal distinctions between the type of IRA you set up and fund yourself and the type that you inherit as a beneficiary from someone else upon their death. In making this ruling, the Court clearly holds that an inherited IRA is an asset of the bankruptcy estate and may be used to satisfy creditors’ claims.
In making this holding, the case clearly favors establishing special trusts as beneficiaries of retirement accounts that do allow for the creditor protection not afforded individual beneficiaries. For more information on this type of trust, please visit:
For more information on the holding of Clark v. Rameker, click here.