Estate Planning

Texas Court Rules Inherited IRA Protected in Bankruptcy

By Greg Herman-Giddens

In a ruling entered on March 16, 2011, the U.S. District Court for the Eastern District of Texas, in Chilton v. Moser (2011, DC TX) 2011 WL 938310,  reversed the bankruptcy court and held that a debtor's inherited IRA met the requirements for a bankruptcy exemption under Bankruptcy Code §522(d)(12).

While this case is encouraging given other cases that have held that inherited IRAs were not protected, this holding applies only to bankruptcy cases, and is law only in the Fifth Circuit.  North Carolina is under the jurisdiction of the Fourth Circuit Court of Appeals.

See these earlier posts (1) (2) about the Chilton ruling in the bankruptcy court and other cases.

I continue to recommend IRA Trusts as the best way to protect IRA funds for beneficiaries.

Full post as published by North Carolina Estate Planning Blog on April 01, 2011 (boomark / email).