On June 12, 2014, the United States Supreme Court unanimously held in Clark v. Rameker Trustee that funds in an individual retirement account (“IRA”) inherited from someone other than the bankrupt debtor’s spouse are not “retirement funds” within the meaning of the United States Bankruptcy Code and are, therefore, available to pay creditors of the debtor-heir.
Under the Bankruptcy Code, certain retirement plans are designated as “excluded” from the bankruptcy estate, which means that individuals can keep them. These include “retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under Section […] 408 of the Internal Revenue Code.” Internal Revenue Code section 408 relates to IRAs...
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Topics: Bankruptcy Code, Clark v. Rameker, Consumer Bankruptcy, Creditors, Estate Planning, IRA, IRC, SCOTUS
Published In: Bankruptcy Updates, Civil Procedure Updates, Finance & Banking Updates, Tax Updates, Wills, Trusts, & Estate Planning Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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