When people on Outagamie get into financial difficulty and consider filing for bankruptcy, one of the concerns that is often aired has to do with how retirement savings will be affected. This is a common worry among those who are having financial problems. While bankruptcy is a viable option for those who have run into issues with their debts and assets that they can’t navigate their way around, it’s imperative to understand bankruptcy exemptions and how they will be examined in a filing.
A recent ruling made by the United States Supreme Court says that retirement savings accounts that are inherited are not shielded from creditors in a bankruptcy. This will have significant ramifications to those who had been functioning under the belief that an IRA was safe in the event of a bankruptcy. Many financial advisers are instructing clients that the higher cost and more complex nature of putting the IRA in a trust is probably worth it for protection purposes. In short, if an IRA is inherited and the person who received it files for bankruptcy, it will not be exempted. One option that has been mentioned to avoid this possibility is for the IRA holder to take out a life insurance policy.
When it comes to filing for bankruptcy, there will be numerous issues that a person will have to deal with. For someone who is not experienced in these matters and has enough on their plate that they’re considering bankruptcy to begin with, the worry about trying to comprehend these complicated laws can be overwhelming. No matter the reason for a bankruptcy filing, whether it’s sudden costs, the loss of a job, an unexpected occurrence or anything else, there are always options. Those who are concerned about losing everything need to understand the facts and what can be protected through bankruptcy exemptions.
With an IRA, the Supreme Court ruling gives a heads-up to those who are having financial issues or anticipate the possibility of them so they can find alternative choices. If there are questions about any aspect of filing for bankruptcy, especially when it comes to retirement savings, the smart decision is to consult with an attorney experienced in bankruptcy law.
Source:Â NASDAQ.com, “In Bankruptcy, Inherited IRAs Are Up For Grabs,” June 20, 2014
