On June 12, 2014, a unanimous Supreme Court ruling claimed that “inherited Individual Retirement Accounts” are not shielded from creditors in bankruptcy proceedings. This decision is slated to clear up confusion about the status of unspent IRAs that parents leave to their children.
The ruling comes from a Wisconsin case where a couple declared bankruptcy yet wanted to prevent creditors from going after a $300,000 IRA that was inherited from a passing parent. Previously, bankruptcy law typically protected retirement assets from the reach of creditors.
This latest ruling is only the most recent that affects baby boomers, inheritance, assets and the like. Let’s take a step back to review rulings that can help advisors grow their practice.
First, let’s return to February 2010, and an Urban Institute report titled “Will Health Care Cost Bankrupt Aging Boomers?” The report found that rising health care costs pose a significant threat to boomers’ retirement security.
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These include out-of-pocket expenses related to premiums, deductibles, copays and holes in Medicare for all adults age 65 and older.