The U.S. Supreme Court ruled that children with inherited IRAs from their parents will not be able to keep the IRA in bankruptcy. What does that mean for your children? If your child has either a bankruptcy, lawsuit, divorce or IRS problems then those creditors can take all or a part of the IRA your child inherited from you.
The solution is simple: the beneficiary of the IRA should be a “stand-alone” IRA trust. This also applies for 401(k)s and 403(b)s. The terms of the trust can be drafted to provide income tax advantages for your beneficiaries and have customized terms that fit your family’s needs.
Talk to Gary to help you decide if an IRA Trust is right for you.