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., in Woodbury, New York
• Pages: 89-90

89

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 na med as the beneficiary of the

IRA for asset protect ion pu rposes. See Commerce Bank v. Bolander, 20 07

WL 1041760, K an. App. 2007.

The following is an example of spendthrift language:

No interest of the beneficiary u nder t his 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 antici-

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

be liable or subject in any manner for the debts, contracts, liabili-

ties, or torts of such beneficia ry.

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

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

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