Inherited IRA .
Does an inherited IRA have the same protection from creditors as any other? Can a court order an account owner to liquidate all or part of an IRA to pay for damages assessed in a legal dispute? Thanks.
Does an inherited IRA have the same protection from creditors as any other? Can a court order an account owner to liquidate all or part of an IRA to pay for damages assessed in a legal dispute? Thanks.
Permalink Submitted by Alan Spross on Thu, 2008-07-31 00:20
Generally, yes, the various state protection provisions will relate to accounts under various sections of the tax code and inherited IRAs are governed by Sec 408 just as owned IRAs are.
Many states offer lesser or no protection for Roth IRAs, which would include inherited Roth IRAs.
Account protection under the federal bankruptcy Act likewise treats inherited IRAs no differently than owned IRAs.
Permalink Submitted by Bruce Steiner on Thu, 2008-07-31 20:49
Several cases have taken a different view: In re Navarre, 332 B.R. 24 (M.D. Ala. 2004); In re Greenfield, 289 B.R. 146 (S.D. Calif. 2003); In re Taylor, 2006 WL 1275400 (Bkrtcy C.D. Ill 2006); In re Sims, 241 B.R. 467 (N.D. Okla. 1999); In re Jarboe, 2007 WL 987314 (Bkrtcy S.D. Tex. 2007); In re Kirchen, 344 B.R. 908 (E.D. Wisc. 2006).
Permalink Submitted by Bob Lloyd on Thu, 2008-07-31 22:06
Sincerely appreciate your willingness to share your considerable knowledge.
Bob