IRA and estate creditors

My brother recently passed away and had a small IRA for benefit of his adult child. He also died with several debts and a small student loan balance.

He had no other financial assets or property at the time of his death and was living on disability

Do the estate creditors have any recourse to the IRA a/c left to son? he lived in NY

thanks



With respect to the general debts, IRA assets are protected against creditors in NYS, therefore the IRA should not be subject to these creditors.

Now with respect to the student loan, there is the possiblity that the US Treasury through the IRS could lien any tax refunds or SS disability benefits up to 15%, but it sounds like he probably has not been subject to filing requirements and probably has no back tax refunds due or back SS disability benefits due. If he does, those benefits could be tapped for the student loan. You said that the loan balance was small, so this is probably unlikely to happen for a small balance. Now, you suddenly have the new potential tax stimulus rebate which his estate may receive that could be tapped also, if he is eligible for any of the low income rebate. With respect to the IRA, I do not know whether the IRS has authority to tap the IRA for student loan debt like they do for income tax debt. In summary, there may be some exposure to the student loan portion of the debt, but not to the other debts.



as i understand the rules…student loans are forgiven when the owner dies.



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