Jump to navigation Jump to content

Inherited IRA Exempt in Bankruptcy

Inherited IRA Exempt in Bankruptcy

It was previously held in In re Clark that inherited individual retirements accounts (IRA’s) were not exempt under bankruptcy laws. In that particular case an IRA was established by Debtors mother and was later inherited by Debtor. When Debtor filed bankruptcy Debtor claimed the IRA as exempt and the Chapter 7 trustee objected. The court granted trustee objection and the Debtor later objected.

                On appeal the district court began looking at exemptions of a traditional IRA including an IRA inherited by Debtor’s spouse. When a spouse inherits an IRA the spouse can contribute to the I
RA and the use of the IRA is subject to the same restrictions as were placed on the deceased spouse. However, a beneficiary on an inherited IRA cannot make contributions and make be required to take funds prior to retirement age. These led the bankruptcy court to believe that the inherited IRA was of nonexempt status.

                The district court however found that a majority of courts held that inherited IRA’s were in fact exempt assets of the bankruptcy based on the idea that once funds reach the status of retirement funds that the funds do not lose that characterization and protection simply because they were inherited by a Debtor. They held that the funds must be retirement funds, but are not required to be Debtor’s retirement funds.


For Current Clients

Our Locations

St. Charles Office

1861 Sherman Drive
St Charles, MO 63303
Phone: 636-916-5400

At Hwy 94 and Hwy 70.

Get Directions | See Detail

St. Louis Office

3470 Hampton Ave, Suite 101
St. Louis, MO 63109
Phone: 314-353-0834

Close to the corner of Hampton Ave and Chippewa. By appointment only.

Get Directions | See Detail

South & Jefferson County office

7321 S. Lindbergh Ave., Suite 222
St. Louis, MO 63125
Phone: 636-916-5400

Across the South County Mall.

Get Directions | See Detail

Florissant Office (North County)

1281 Graham Rd, Suite 300
Florissant, MO 63031
Phone: 314-921-1880

At North Hanley and Hwy 270.

Get Directions | See Detail

Belleville Office (St. Clair county)

2 Park Place Professional Centre
Belleville, Illinois 62226
Phone: 618-977-9560

On Hwy 159, next to Schnucks.

Get Directions

Granite City Office (Madison County)

3600 Nameoki Rd, Suite 201
Granite City, IL 62040
Phone: 618-977-9560

Across Shop'n Save, by appointment only.

Get Directions | See Detail

Follow Us On