Use of Separate Irrevocable Spendthrift Trust as Beneficiary of an Inherited IRA for Asset Protection Purposes

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., Woodbury, New York
• Pages: 152-153

152

USE OF SEPARATE

IRREVOCABLE

SPENDTHRIFT TRUST

AS BENEFICIARY OF

AN INHERITED IRA FOR

ASSET PROTECTION

PURPOSES

exeCutive summary:

Based on a Kansas Appellate state court case, it may be worthwhile to

have an irrevocable spendthrift trust named as the beneficiary of the IRA

for asset protection purposes. See Commerce Bank v. Bolander, 2007 WL

1041760, Kan. App. 2007.

The following is an example of spendthrift language:

No interest of the beneficiary under this trust agreement whether

characterized as either income or principal by a court or by this

agreement shall be subject to pledge, assignment, sale, or transfer

in any manner, nor shall the beneficiary have the right to anticipate,

charge, or encumber his or her interest, nor shall such interest be

liable or subject in any manner for the debts, contracts, liabilities,

or torts of such beneficiary.

To summarize, it is possible that leaving an IRA to a revocable trust

may expose an inherited IRA to claims of the deceased IRA owner’s

creditors based on the Kansas court case referred to above. That is why