Loss of Creditor Rights Protection of Decedent's IRA in State Court

AuthorSeymour Goldberg
ProfessionSenior partner in the law firm of Goldberg & Goldberg, P.C., Woodbury, New York
Pages149-151
149
LOSS OF CREDITOR
RIGHTS PROTECTION
OF DECEDENT’S IRA IN
STATE COURT
*Commerce Bank v. Bolander
2007 WL 1041760
(Kan. App., 2007)
(Selected portions of the opinion are provided below)
In the Commerce Bank v. Bolander case, Wanda executed a trust where she
was the beneficiary of the trust during her lifetime and reserved the right
to amend or revoke the trust at any time. The purpose of the trust was to
provide for the educational expenses of her lineal descendants.
When Wanda died, her two IRAs were payable to her trust. The
IRAs total value at the time of her death was $212,545.80.
Commerce Bank sought a monetary judgment against her estate and
the trust. The bank claimed that the trust property was subject to the
bank’s claim. The trustee argued that the bank could not attach the trust
assets.
It is undisputed that the trust was clearly a revocable trust. The
trustee claims that the trust became irrevocable after Wanda’s death and
that the IRA benefits payable to the trust are exempt from any and all
claims of creditors of the decedent. According to the court, if Wanda had
named specific beneficiaries of the IRA, then the IRA proceeds would
automatically pass at her death to the named beneficiaries. However,
Wanda named her revocable trust as the beneficiary of her IRAs, and the
legislature has determined that assets in a revocable trust are subject to
the claims of creditors of the settlor at the death of the settlor.
The Kansas Uniform Trust Code provides that during the lifetime
of the settlor, the property of a revocable trust is subject to the claims of

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