On June 12, 2014, the United States Supreme Court unanimously ruled that individual retirement accounts (IRAs) left to a non-spouse beneficiary are not protected from bankruptcy proceedings. As a result of this decision, individuals who have inherited IRAs are now confronted with the prospect of not having these assets protected from creditors when filing for bankruptcy.

Hedi Heffron-Clark inherited an IRA worth about $300,000 when her mother died in 2001.

In October 2010 she filed for bankruptcy protection. In Clark v. Rameker, the Supreme Court ruled that
inherited IRAs do not enjoy the same protection that traditional IRAs do and are not considered “retirement funds”. Therefore she could not shield these funds from her creditors.

Had she consulted with us and an IRA Inheritance Trust been established, she would have protected the money from her creditors. If there is one lesson to be learned from this case it is not what you own that matters, but how you own it.

Benjamin D. Eckman, Esq. concentrates his practice on Elder Law & Estate Planning. Elder law is intended to broadly assist “extended living”. An elder law practitioner provides the legal information necessary for persons whose lives will extend or have already extended beyond the time when all children are usually out of the house and when regular employment ceases. After the elder law attorney and client complete their work, legal documents have been drafted, tax considerations have been analyzed, and a plan to protect the elder’s estate has been implemented.

Benjamin D. Eckman’s practice focuses on Estate Planning & Elder Law – legal issues facing senior citizens. Benjamin D. Eckman received his Bachelor’s Degree in Business/Accounting from Touro College and his law degree from Seton Hall University School of Law. He is a member of the New York State Bar Association, the New Jersey State Bar Association, the National Academy of Elder Law Attorneys, the Elder Law Section and Real Property, Probate and Trust Section of the New Jersey State Bar Association, the Union County Bar Association, Passaic County Bar Association and the Bergen County Bar Association. He can be reached at (973) 709-0909, (908) 206-1000 or (201) 263-9161.