Wednesday, July 30, 2014
Some investors that are lucky enough to benefit from a nonspousal inherited IRA are better off living in some states than others. Alaska, Arizona, Florida, Missouri, North Carolina, Ohio and Texas are the only states where nonspousal inherited IRAs are safe from trustees seeking assets in the settlement of bankruptcy cases.
The recent Supreme Court decision in Clark v. Rameker has the most immediate impact on consumer debtors and on financial advisors who recommend IRAs as estate planning tools. Lawyers involved in bankruptcy proceedings must decide whether to proceed under a state or federal exemption. “ There are some states that do protect inherited IRAs so the fact that they are not protected under the federal exemption doesn’t mean that states can’t create their own. States can create their own exemptions if there is a reason to.”
See Cyril Tuohy, Nonspousal Inherited IRA Assets Protected in 7 States, Insurance News Net, July 29, 2014.