I recently saw an article that discusses creditor protection for IRAs and beneficiaries. Most clients, and many advisors, are still unaware that an inherited IRA is not protected against claims of the beneficiary’s creditors. In 2014, the U.S. Supreme Court made this ruling. At that time I covered this in one of my newsletters, the link to which is found here: How to Protect Inherited IRAs After the Clark v. Rameker Decision.
The good news is that asset protection of IRAs (and other retirement account assets such as 401k’s, 403b’s, etc.) can still be achieved with the use of an IRA Inheritance Trust. That trust can be designed so that the life expectancy of the beneficiary will be used for required minimum distribution purposes thereby allowing the beneficiary to stretch-out the income tax consequences of the IRA distributions.
This article, written by Eric Dunner, J.D., CFP, is worth the read. Here is the link: