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Topic #77:: Exemptions: Inherited IRAs exempt under either 522(b)(3)(C) or 522(d)(12)?

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Exemptions > IRAs > Inherited IRAs

Exemptions: Inherited IRAs exempt under either 522(b)(3)(C) or 522(d)(12)?

11 Cases , IssueID 77
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Topic Description:

The Supreme court in Clark v. Rameker, 134 S. Ct. 2242, U.S. S.Ct, 6/12/2014, held that inherited IRAs are NOT EXEMPT, at least under federal law. The court did not address state law exemptions.
Before the Supremes weighed in on the issue, this topic was litigated heavily.
While IRAs are clearly exempt, there was a split in caselaw on the issue of whether inherited IRAs are also exempt. Cases seem to be trending to say that inherited IRAs they ARE exempt. One case saying otherwise was reversed by the Fifth Circuit in March 2012. (In re Chilton) Meanwhile, a recent 2013 decision from the 7th Circuit (In re Clark) has held that they are not exempt.

"Most of the courts that have analyzed this issue have concluded that inherited IRAs are "retirement funds" as that phrase is used in section 522(d)(12).[1] Nessa, 426 B.R. at 314; In re Kuchta, 434 B.R. 837, 843-44 (Bankr. N.D. Ohio 2010); In re Tabor, 433 B.R. 469, 476 (Bankr. M.D. Pa. 2010); In re Thiem, 443 B.R. 832, 843-44 (Bankr. D. Ariz. 2011); In re Weilhammer, No. 09-15148-LT7, 2010 WL 3431465, at *4-*6 (Bankr. S.D. Cal. Aug. 30, 2010); In re Stephenson, U.S. Dist. LEXIS 142360, at *7-*8. These courts have noted that the statute does not explicitly limit "retirement funds" to retirement funds that belong to the debtor. See, e.g., Nessa, 426 B.R. at 314. Accordingly, they have reasoned that "retirement funds" can include the funds that others had originally set aside for their retirement, as with inherited IRAs. Id." In re Chilton

See also: http://www.ncbrc.org/tag/inherited-iras/

"The line of cases that deny exemptions in inherited IRAs commonly conclude that inherited IRAs are (1) fundamentally different from a traditional IRA under the IRC and (2) lack a retirement purpose. These courts determined that an inherited IRA is (1) subject to an entirely different set of rules upon the use, distribution and taxation of the funds, and (2) no longer for used for retirement purposes but is "a liquid asset which may be accessed by [the debtor] at his discretion withhout penalty, and which he must take as income within a relatively short period of time without regard for his retirement needs." In re Sims, 241 B.R. 467, 470 (Bankr.N.D.Okla. 1999) (Oklahoma law); see also In re Chilton, 426 B.R. 612 (Bankr.E.D.Tex.2010) (§ 522(d)(12)); In re Ard, 435 B.R. 719 (Bankr.M.D.Fla.2010) (Florida law and citing case law for § 522(d)(12), and citing Robertson v. Deeb, 16 So.3d 936 (Ct.App.2 Dist.2009)) (non-spousal inherited IRA not exempt from garnishment); In re Klipsch, 435 B.R. 586 (Bankr.S.D.Ind.2010) (Indiana law); In re Jarboe, 365 B.R. 717 (Bankr.S.D.Tex.2007) (Texas law); In re Taylor, 2006 WL 1275400, at *2 (Bankr. C.D.Ill.2006) (Illinois law); In re Navarre, 332 B.R. 24 (Bankr.M.D.Ala.2004) (Alabama law).
" In re Thiem 433 BR 823 (disagreeing with cited cases).

Lines of Cases:

A:

Yes. Inherited IRAs are exempt

B::

No, inherited IRAS are not exempt.
  • Type A = Yes. Inherited IRAs are exempt
  • Type B = No, inherited IRAS are not exempt.
  • Type E = "Everything Else"
  • Cases for Zip
  • All Cases By Date
  • Cases A - Z

Cases for Zip , California Northern District Bankruptcy Court

Supreme Court

� Clark v. Rameker

U.S. S.Ct - 134 S. Ct. 2242 - 2014-06-12 - ,

Google ID#: 6536441922745620892
(Type B : No, inherited IRAS are not exempt. )

Supreme Court holds that Inherited IRAS are NOT exempt in bankruptcy under federal law. Does not address state law exemptions.

Ninth Circuit Cases

� In re Thiem

Bankr. D. Ariz. - 443 B.R. 832 at 843-44 - 2011-01-19 - ,

Google ID#: 11855545188029393107
(Type A : Yes. Inherited IRAs are exempt )

Other Circuits

� In re Clark

7th Cir. - No. 12-1241 - 2013-04-23 - ,

Google ID#: 4473081229373529275
(Type B : No, inherited IRAS are not exempt. )

� In re Chilton

5th. Cir. - 674 F.3d 486 - 2012-03-12 - ,

Google ID#: 10711640618602061712
(Type A : Yes. Inherited IRAs are exempt )

� IN THE MATTER OF STEPHENSON

Dist. Court ED Michigan - Case No. 11-cv-10848. - 2011-12-12 - ,

Google ID#: 16656732735658915715
(Type A : Yes. Inherited IRAs are exempt )

� In re Daley

Bankr.E.D.Tenn - 459 B.R. 270 - 2011-10-11 - ,

Google ID#: 2973389129651509936
(Type E : )

Debtor's IRA with Merrill Lynch was not exempt due to language in a standard Client Relationship Agreement which gave Merrill a Lien on all IRA funds used for Margin or borrowing. Debtor never did either, but the clause itself was enough to render the IRA not exempt, according to the judge.

� In re Taber

Bankr.N.D. Ohio - 2011 WL 4048521; Case No. 06-33421 - 2011-09-12 - ,

Google ID#: 9061595639044771524
(Type A : Yes. Inherited IRAs are exempt )

Trustee claimed that Ohio debtor was limited to Ohio exemptions and could not take the IRA exemption under 522(b)(3), even though it sustained the objection to the debtor's assertion that the property was excluded from the estate via 541(c)(2) because debtor presented no arguments or evidence that the requirements of 541(c)(2) had been met. Nevertheless the exemption was allowed because the Trustee did not meet the burden of challenging the debtor's claim of exemption.

� In re Tabor

Bankr. M.D. Pa. - 433 B.R. 469 at 476 - 2010-06-18 - ,

Google ID#: 11965064805501798189
(Type A : Yes. Inherited IRAs are exempt )

inherited IRAs are "retirement funds" as that phrase is used in section 522(d)(12). The statute does not explicitly limit "retirement funds" to retirement funds that belong to the debtor.

� In re Klipsch

Bankr.S.D.Ind. - 435 B.R. 586 - 2010-06-07 - ,

Google ID#: 8240570199610175655
(Type B : No, inherited IRAS are not exempt. )

� In re Nessa

8th Cir BAP - 426 B.R. 312 at 314 - 2010-04-09 - ,

Google ID#: 13364698040135409747
(Type A : Yes. Inherited IRAs are exempt )

inherited IRAs are "retirement funds" as that phrase is used in section 522(d)(12). The statute does not explicitly limit "retirement funds" to retirement funds that belong to the debtor.

� In re Chilton

Bankr. E.D.Tex. - 426 B.R. 612 - 2010-03-05 - 13 ,

Google ID#: 11532824026961272342
(Type B : No, inherited IRAS are not exempt. )

Inherited funds from debtor's mother's IRA account were not exempt under Section 522(d)(12). (Overruled by 5th Circuit, March 2012)

� Clark v. Rameker

U.S. S.Ct - 134 S. Ct. 2242 - 2014-06-12 - ,

Google ID#: 6536441922745620892
(Type B : No, inherited IRAS are not exempt. )

Supreme Court holds that Inherited IRAS are NOT exempt in bankruptcy under federal law. Does not address state law exemptions.

� In re Clark

7th Cir. - No. 12-1241 - 2013-04-23 - ,

Google ID#: 4473081229373529275
(Type B : No, inherited IRAS are not exempt. )

� In re Chilton

5th. Cir. - 674 F.3d 486 - 2012-03-12 - ,

Google ID#: 10711640618602061712
(Type A : Yes. Inherited IRAs are exempt )

� IN THE MATTER OF STEPHENSON

Dist. Court ED Michigan - Case No. 11-cv-10848. - 2011-12-12 - ,

Google ID#: 16656732735658915715
(Type A : Yes. Inherited IRAs are exempt )

� In re Daley

Bankr.E.D.Tenn - 459 B.R. 270 - 2011-10-11 - ,

Google ID#: 2973389129651509936
(Type E : )

Debtor's IRA with Merrill Lynch was not exempt due to language in a standard Client Relationship Agreement which gave Merrill a Lien on all IRA funds used for Margin or borrowing. Debtor never did either, but the clause itself was enough to render the IRA not exempt, according to the judge.

� In re Taber

Bankr.N.D. Ohio - 2011 WL 4048521; Case No. 06-33421 - 2011-09-12 - ,

Google ID#: 9061595639044771524
(Type A : Yes. Inherited IRAs are exempt )

Trustee claimed that Ohio debtor was limited to Ohio exemptions and could not take the IRA exemption under 522(b)(3), even though it sustained the objection to the debtor's assertion that the property was excluded from the estate via 541(c)(2) because debtor presented no arguments or evidence that the requirements of 541(c)(2) had been met. Nevertheless the exemption was allowed because the Trustee did not meet the burden of challenging the debtor's claim of exemption.

� In re Thiem

Bankr. D. Ariz. - 443 B.R. 832 at 843-44 - 2011-01-19 - ,

Google ID#: 11855545188029393107
(Type A : Yes. Inherited IRAs are exempt )

� In re Tabor

Bankr. M.D. Pa. - 433 B.R. 469 at 476 - 2010-06-18 - ,

Google ID#: 11965064805501798189
(Type A : Yes. Inherited IRAs are exempt )

inherited IRAs are "retirement funds" as that phrase is used in section 522(d)(12). The statute does not explicitly limit "retirement funds" to retirement funds that belong to the debtor.

� In re Klipsch

Bankr.S.D.Ind. - 435 B.R. 586 - 2010-06-07 - ,

Google ID#: 8240570199610175655
(Type B : No, inherited IRAS are not exempt. )

� In re Nessa

8th Cir BAP - 426 B.R. 312 at 314 - 2010-04-09 - ,

Google ID#: 13364698040135409747
(Type A : Yes. Inherited IRAs are exempt )

inherited IRAs are "retirement funds" as that phrase is used in section 522(d)(12). The statute does not explicitly limit "retirement funds" to retirement funds that belong to the debtor.

� In re Chilton

Bankr. E.D.Tex. - 426 B.R. 612 - 2010-03-05 - 13 ,

Google ID#: 11532824026961272342
(Type B : No, inherited IRAS are not exempt. )

Inherited funds from debtor's mother's IRA account were not exempt under Section 522(d)(12). (Overruled by 5th Circuit, March 2012)

All Cases A to Z

  • Clark v. Rameker, 134 S. Ct. 2242 , (U.S. S.Ct ) 2014-06-12, #6536441922745620892
  • In re Chilton, 674 F.3d 486 , (5th. Cir. ) 2012-03-12, #10711640618602061712
  • In re Chilton, 426 B.R. 612 , (Bankr. E.D.Tex. ) 2010-03-05, #11532824026961272342
  • In re Clark, No. 12-1241 , (7th Cir. ) 2013-04-23, #4473081229373529275
  • In re Daley, 459 B.R. 270 , (Bankr.E.D.Tenn ) 2011-10-11, #2973389129651509936
  • In re Klipsch, 435 B.R. 586 , (Bankr.S.D.Ind. ) 2010-06-07, #8240570199610175655
  • In re Nessa, 426 B.R. 312 at 314 , (8th Cir BAP ) 2010-04-09, #13364698040135409747
  • In re Taber, 2011 WL 4048521; Case No. 06-33421 , (Bankr.N.D. Ohio ) 2011-09-12, #9061595639044771524
  • In re Tabor, 433 B.R. 469 at 476 , (Bankr. M.D. Pa. ) 2010-06-18, #11965064805501798189
  • In re Thiem, 443 B.R. 832 at 843-44 , (Bankr. D. Ariz. ) 2011-01-19, #11855545188029393107
  • IN THE MATTER OF STEPHENSON, Case No. 11-cv-10848. , (Dist. Court ED Michigan ) 2011-12-12, #16656732735658915715

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