Article on Inherited IRAs

Lester B. Law & Bryan D. Austin recently published an article entitled, Inherited IRAs: Tragedy or Planning Opportunity—Clark v. Rameker, 28 Probate & Property No. 5 (Sept. & Oct. 2014).  Provided below is an excerpt from the article:

In Clark v. Rameker, 573 U.S. __ (2014) (No. 13-299), the Supreme Court unanimously held inherited IRAs are not exempted “retirement accoutns” under the federal Bankruptcy Code. This article summarizes the facts, outlines the judicial history, examines the rationale, and provides some insights into planning for IRAs in light of the new case.

    Like many cases, Clark is akin to a theatrical production.

        Act I—The Creation and Inheritance

Scene I—The Creation

The curtain rises.

    It is the new millennium and Ruth Heffron (Ruth) visits her financial advisor to establish a Traditional IRA, naming her daughter, Heidi Heffron-Clark (Heidi), as the beneficiary. Though uncertain, the audience believes that the IRA was probably rolled over from Ruth’s deferred compensation account (for example, her 401k).