It depends on where you live, or more precisely where your beneficiaries live. In the Fifth Circuit
and Eighth Circuit
your inherited IRA is protected, but in April this year the Seventh Circuit
held that Wisconsin resident Heidi Heffron-Clark’s inherited IRA worth $300,000 was available to her creditors. This was a devastating result for her, and definitely not what her mother envisioned when leaving her lifetime savings to her daughter. What about here in California? The Ninth Circuit has yet to take up the question, and it is anyone’s guess what they will hold should the question come up.
The good news is this: if you are planning on leaving your IRA to your children, or other beneficiaries, there are ways of providing creditor protection with some advanced estate planning.
Erik is the founder of Estate Plan Pros, a leading estate planning practice in Elk Grove. Erik’s practice focuses on Estate Planning Law. In Estate Planning, Erik works with clients to make the process simple, so clients can focus on more important things. He is a local authority for specialized estate planning instruments, like Special Needs Trust, Irrevocable Trusts, or other focused documents. Erik has litigated, negotiated, and mediated the gamut of family law cases. With this unique perspective as a family law and estate attorney he can often spot issues otherwise overlooked. Prior to graduating he worked as a legislative analyst for a non-profit organization, and volunteered as a youth counselor. Erik currently participates in local politics and is an active member of his local church. Erik is very happily married and has two young sons. Together, his family loves to get outdoors and enjoy the varied activities the Sacramento region has to offer.