Save Your Estate: IRA's protected from Bankrupt's Creditors

Save Your Estate

Why should the government or anyone else direct what happens with your estate assets? Why should a court, a stranger, or someone other than your choice make the medical and financial decisions for you if you become sick and incapacitated? Why should anyone other than your spouse, life partner, or the one you choose make the decisions about your illness, hospital visits, your funeral and what happens to your estate?

About Me

Name: Ron Cappuccio

Location: Cherry Hill, NJ, United States

Ronald J. Cappuccio, J.D., LL.M.(Tax), business and tax attorney, has more than 30 years of tax and business law experience. Our firm helps form businesses and helps you grow and increase the profitability of your business. We will not let the IRS and state government prevent you from being successful. As a lawyer since 1976, admitted to practice before NJ State and Federal Courts, including the US Tax Court and the Court of Federal Claims, I have helped clients from around the U.S. as well as multi-national clients. I have dedicated my life to agitating people - especially the IRS and government functionaries. I have never worked for the IRS and therefore I do not have to worry about them as former colleagues. Fighting the government so you can keep your money is just plain fun for me!

Monday, April 04, 2005

IRA's protected from Bankrupt's Creditors

In a unanimous decision, Rousey v. Jacoway, the Supreme Court held that creditors may not reach IRAs for petitioners who file bankruptcy. This means IRA's are treated the same as other pension type plans for Bankruptcy purposes. As a basis for its decision, the US Supreme Court relies upon the access restriction to IRA assets under federal law. Specifically, the Court looks at the 10 percent excise tax penalty for premature withdraws prior to age 59 1/2 to say that, while the assets in the IRA are vested, the penalty is sufficiently draconian that the full value of the assets contained in the IRA is only available "on account of age" so it is excludable from the bankruptcy estate under 11 USC 522(d)(10)(E).