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
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