UPCOMING EVENTS

SEMINARS FOR SEPTEMBER 2016

MONROEVILLE / PITTSBURGH
Tuesday, September 13, 2016
2:00PM
Courtyard Marriott / Monroeville
3962 Wm Penn Highway
Monroeville, PA 15146
Between Sheetz and Eat ‘n Park
 
MURRYSVLLE / DELMONT
Tuesday, September 13, 2016
7:00PM
Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant on Rt. 22
 
HARMARVILLE / PITTSBURGH
Wednesday, September 14, 2016
2:00PM
TownePlace Suites / Pittsburgh
2785 Freeport Road
Pittsburgh, PA 15238
Just off of Exit 48 of PA Turnpike
 
MONROEVILLE
Wednesday, September 14, 2016
7:00PM
The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22
 
MURRYSVLLE / DELMONT
Saturday, September 17, 2016
10:00AM
Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant
 

 
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We would enjoy bringing your group timely estate planning information.

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All seminars are
FREE and open to the public
Call and reserve your spot today!
 
Proudly serving clients throughout Allegheny, Westmoreland, Butler, Fayette, and Washington Counties; including Pittsburgh, Monroeville, Greensburg, Latrobe, Cranberry, Wexford, Sewickley and YOUR community.

Supreme Court Warns Inherited IRA’s Not Protected From Creditors, Unless Held In A Trust

Are you exposing your family to complete loss of Inherited IRA or 401k accounts?

For most families, the family home and their retirement accounts represent their two most valuable assets, often representing over 75% of the total wealth available to pass on to loved ones upon death. In addition to the tax benefits of qualified retirement accounts, an often overlooked yet valuable benefit is the protection which IRA’s and 401k’s offer against the account owner’s creditors.  Under federal bankruptcy law, these retirement accounts remain unavailable to creditors, based upon the legislative goal that even a debtor should have a reasonable shot at a safe and comfortable retirement some day. Thus, we enjoy both tax-deferred growth and great asset protection.

When a person dies and leaves these valuable accounts to their beneficiaries, however, the rules change in many ways.

Attorneys have debated for years whether the beneficiary of an IRA or 401k has the same asset protection which the original owner enjoyed. In an article I wrote last year, Protecting Your IRA For Your Children, I reminded my readers of this potential risk.  Just last week, in the case of Clark v. Rameker, the U.S. Supreme Court provided the final answer, and it wasn’t a happy ending. (Some days I hate being right.) The Court held that the beneficiary of an Inherited IRA could not protect the account from the claims of her creditors. As a result, the $300,000 remaining in the beneficiary’s Inherited IRA from her parents was found to be exposed. How and why the beneficiary ended up in a position where she and her husband couldn’t continue to meet their debts was irrelevant.  All that mattered was that the IRA had become an Inherited IRA upon the death of the account owner, which in the eyes of the Court meant that it was no longer entitled to the creditor protection of the statute.

Don’t be misled: Inherited IRA’s remain a wonderful legacy of wealth to leave for a family member. Properly handled, the beneficiary can continue to enjoy continued growth and income tax deferral for years, decades, and even for their lifetime.  Without adequate planning, however, these accounts will also remain exposed to the risks which can become realities in anyone’s life. A bad car accident, a business which fails, loss of a job, soaring medical bills, the bursting of an investment bubble, poor credit management, and many more circumstances can turn a solvent family into an insolvent family very quickly.

Protection is available which can give a family the best of both worlds, with the tax benefits of an Inherited IRA, but the protection from creditors which the Supreme Court has told us doesn’t otherwise exist. We often create Retirement Plan Trusts for our clients for just this reason. As I describe in my recent article Inherited IRA/401k Trusts: Making A Sweet Deal Even Sweeter For Your Family, a qualified estate planning attorney can design a plan which includes a protective trust for beneficiaries. Properly drafted, this trust for the beneficiary can continue to obtain all of the tax benefits to which an Inherited IRA is entitled, including a lifetime of income tax-deferred (or for a Roth account, tax-free) growth. While the account makes Required Minimum Distributions to the beneficiary through their lifetime, much as the account owner has to take RMD’s after age 70 ½, the balance of the account remains available to make the beneficiary’s life better as well. If the trust is drafted to provide protection from creditors, then this protection will extend to the Inherited IRA as well.