Inherited IRA Now Fully Exempt In Florida By New Statute

I wrote blog posts in this blog and on my asset protection blog about  Florida court decision finding that a debtor’s IRA inherited from another family member, excluding spouses’ rollover, was not exempt from the debtor’s creditors because the IRA represented an inheritance rather than the debtor’s own retirement savings.

Florida statute section 222.21 will be amended to specifically included inherited IRAs as well as rollover IRAs. You can read the bill here.  The bill is retroactive so it does not matter if the IRA was established or inherited before this bill becomes law. Also, the bill is applicable to IRAs owned by Florida residents even if the deceased owner lived elsewhere.

I do not see many bankruptcy debtors with inherited IRAs. Come to think of it, I cannot recall any bankruptcy trustee asking my client whether the IRA on their bankruptcy schedules was their own IRA or was an inherited IRA.  I am sure that there are a few bankruptcy cases where a trustee has challenged the exemption of the debtor’s IRA because it was inherited. If you are one of those debtors you should tell your attorney about this new law and make sure the law (remember, its retroactive) saves your inherited IRA from your bankruptcy trustee.