Just to be sure it’s clear, the titles of these blogs are myths. So in this case, the confusion about creditor protection of Inherited IRAs has been settled by the Supreme Court just this month: Inherited IRAs do not have creditor protection. They don’t.
“In Clark, et ux v. Rameker, 573 U. S. ____ (Jun, 12, 2014), the U.S. Supreme Court unanimously held that funds held in inherited IRAs are NOT protected as “retirement funds” within the meaning of Bankruptcy Code Section 522(b)(3)(C) of the federal bankruptcy code.” (Thank you WealthManagement.com http://bit.ly/1nos60k)
In a surprisingly sensible decision, the Supremes used these tests to determine that Inherited IRAs do not deserve the protections afforded retirement accounts under IRS code:
Unlike other retirement accounts, Inherited IRAs have these unique features:
This decision greatly amplifies the importance of careful estate planning for your retirement funds.