Caution: Creditors Now Have Easy Access to Inherited IRAs

Gabriel Katzner - January 19, 2016 - Estate Planning

(This is part 1 in a 3-part series).

Do you have IRAs or other retirement accounts that you plan to leave to your loved ones?  If so, proceed with caution.  Most people don’t know the law has changed: in Clark v. Rameker, the United States Supreme Court effectively ruled that inherited retirement accounts no longer have asset protection, meaning they can be seized by strangers.

How Can Inherited IRAs Be Protected?  Enter the Standalone Retirement Trust

Fortunately, retirement account protection still exists but only if you take action.  Many people like you are using Standalone Retirement Trusts (SRT) to protect retirement assets.  The SRT is a special type of revocable trust just for retirement accounts.

A properly drafted SRT:

  • Protects the inherited retirement accounts from creditors as well as predators and lawsuits
  • Ensures that inherited retirement accounts remain in your bloodline and out of the hands of a daughter-in-law or son-in-law or former daughter-in-law or son-in-law
  • Allows for experienced investment management and oversight of the assets by a professional trustee
  • Prevents the beneficiary from gambling away the inherited retirement account or blowing it all on exotic vacations, expensive jewelry, designer shoes, and fast cars
  • Enables proper planning for a special needs beneficiary
  • Permits you to name minor beneficiaries such as grandchildren without the need for a court-supervised guardianship
  • Facilitates generation-skipping transfer tax planning to ensure that estate taxes are minimized or even eliminated at each generation of your family

The Bottom Line on Protecting Inherited IRAs

Unfortunately, the Supreme Court decision has made outright beneficiary designations for IRAs and other retirement accounts risky business.  However, we are here to help you decide whether an SRT is a good fit for you and to answer your questions about protecting your retirement accounts. Contact our office to learn more about protecting the asset you worked a lifetime for.

You can schedule a call with us or reach us directly at 855.528.9637 to learn more about how best to plan today to protect those most important to you.

Part 2:

5 Reasons to Protect Your Retirement Accounts Now

Part 3
Warning: Don’t Let Creditors Inherit from You

 

Gabriel Katzner

In 2002, Gabriel Katzner, the founding partner of Katzner Law Group received his Juris Doctorate with honors from the Fordham University School of Law. After spending the first 7 years of his legal career
practicing at Cahill Gordon & Reindel LLP, an international law firm based in New York, he went on to found his own firm.

Gabriel Katzner has a track record, along with a vast number of outstanding public reviews across platforms, of working hard on behalf of individuals who need assistance with comprehensive
estate planning services. Finding a lawyer who is knowledgeable about revocable and irrevocable trust planning, guardianship for minor children, asset protection, trust administration and probate,
as well as Medi-Cal / Medicaid planning is extremely important.

Years of experience: More than 17 years
Locations: New York, NY / San Diego, CA

Frequently Asked Questions

Who would inherit your assets after you pass away?

When you pass, a will helps clarify who will get what so that your loved ones are not left to guess and argue over how things get processed. A will also designates the executor of your estate, so there should be no arguments in court about who should be in charge.

Who will take guardianship of your minor children?

If you pass with minor children and their other parent is not alive or capable of caring for them, you can clarify which family member you would like to have guardianship in your will.

How do we structure things so that your assets are income tax advantageous during life and estate tax-advantageous at death?

For higher-value estates, estate planning with related taxes in mind is a complex process. We can determine how to position your assets in special trusts or other mechanisms to ensure your family receives as much of your estate as possible.

Would your assets be left to your beneficiaries outright (bad idea) or through a protected trust structure (much better idea)?

You decide how your beneficiaries receive your assets, whether in a lump amount all at once through your will or in a structured way over time through a living trust.

Who would administer your estate after you pass away?

When you pass, there is a person who is given the responsibility to distribute your assets in line with your wishes. If you do not identify someone in your will, you risk the courts assigning the task to someone you might not prefer.

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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. Furthermore, it has received approval from attorney Gabriel Katzner, an experienced estate planning lawyer with over 17 years of legal expertise.

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