We recently had some discussions with a Madison family that was trying to make the most of their father’s IRA. The family wanted to make sure that after the father died, the IRA would benefit one of the children, and then after that child died, the family wanted the IRA to be shared among the other children.
A lot of people have a fear of probate. Technically speaking it is a court proceeding and generally, most people do not like dealing with the courts. Therefore if you don’t like dealing with courts, then you are not going to like going through a probate.
In a landmark, unanimous 9-0 decision handed down on June 12, 2014, the United States Supreme Court held that inherited IRAs are not “retirement funds” within the meaning of federal bankruptcy law. This means they are available to satisfy creditors’ claims. This case an adult child, who had inherited her IRA from her mom and subsequently, due to a change in the business environment had to declare personal bankruptcy due to her failing business.