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Whether inherited IRA's are exempt in Chapter 7 bankruptcy?

Brooklyn, NY |

I have IRA's of my son that I'm a beneficiary of. Unfortunately, my son passed away and I was advised by financial adviser to transfer these IRA to my IRA account that's already in existence. Unfortunately, I may be forced to file Chapter 7 in a near future. Will I be able to exempt these inherited IRAs in addition to my IRA account? Thank you

Attorney Answers 3


  1. Although I have never had this specific issue, it is my understanding that all types of IRAs are exempt (protected) from creditors both inside and outside of bankruptcy. Consult with a local BK attorney.

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  2. This issue should definitely be discussed with a bankruptcy attorney in your area as the answer may depend on your jurisdiction. Generally, your IRA accounts are fully exempt. However, inherited IRAs are a different story depending on the jurisdiction. Recently, the 5th Circuit Court of Appeals held that these IRAs are exempt under the Federal Exemptions. However, other states that require debtors to use state exemptions may not allow for an exemption of this type. New York is not in the 5th Circuit but I believe it does allow for use of the Federal Exemptions so you may be in the clear. Again, you should contact a local bankruptcy attorney who knows how a New York bankruptcy court will treat this asset.

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  3. I agree with the other attorneys, this depends on the law in your jurisdiction. Inherited IRAs may very well be exempt but you should speak with a bankruptcy attorney in your area to be sure.

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