Inherited IRA, New Case Allows Exemption

In a prior post I discussed cases where a who inherited IRA was found not to be exempt from creditors when the IRA was not inherited by a spouse. A recent decision found the inherited IRA to be exempt in a Florida bankruptcy. In re Mathusa, 2011 Bankr Lexis 965(Bankr. M.D. FL. March 28, 2011). The court adopted and expanded upon the reasoning of an appellate court decision in In re Nessa, 426 BR 312(8th Cir. BAP 2010).

This court distinguished prior Florida bankruptcy decisions that found that an inherited IRA was not exempt under Florida law pursuant to Florida Statute 222.21(2). However, though Florida is an opt-out state as to exemptions, a Florida resident can still utilize a section added by BAPCPA. Section 522(b)(3)(C) applies to opt-out states and can be used to protect inherited IRAs.

Mathusa will hopefully resolve this issue which will allow estate planning attorneys, bankruptcy attorneys and their clients to sleep easier.



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