Are Inherited IRAs Protected from the Deceased’s Creditors in Florida?
In Florida, one of the most common questions among estate planning and probate attorneys is whether inherited IRAs are protected from the deceased’s creditors. The answer to this question is both complex and significant, as it directly impacts the financial security of beneficiaries.
Understanding Inherited IRAs
An IRA, or Individual Retirement Account, is a tax-advantaged savings account designed to encourage individuals to save for retirement. When an individual passes away, their IRA becomes an inherited IRA. The rules governing inherited IRAs can vary depending on the type of IRA and the relationship between the deceased and the beneficiary.
Protection under Florida Law
In Florida, inherited IRAs are generally protected from the deceased’s creditors. This protection is provided under the state’s elective share law, which ensures that certain assets are reserved for the surviving spouse and children, even if the deceased’s estate is subject to creditor claims.
Elective Share Law
The elective share law in Florida requires that a surviving spouse or children receive a specific portion of the deceased’s estate, regardless of what the deceased’s will or trust may dictate. This elective share includes certain retirement accounts, such as inherited IRAs, up to a certain percentage of the deceased’s estate.
Exemptions and Exceptions
While inherited IRAs are generally protected, there are exceptions and exemptions that may affect their protection from creditors. For example, if the inherited IRA was jointly owned with the deceased, the entire account may be subject to creditor claims. Additionally, if the deceased’s estate is being probated, any assets, including inherited IRAs, may be at risk until the probate process is completed.
Consulting with an Attorney
Given the complexities surrounding inherited IRAs and creditor protection, it is crucial to consult with an experienced estate planning attorney in Florida. An attorney can help ensure that your inherited IRA is protected from the deceased’s creditors and that your rights as a beneficiary are upheld.
Conclusion
In summary, inherited IRAs in Florida are generally protected from the deceased’s creditors, thanks to the state’s elective share law. However, it is essential to understand the exceptions and consult with an attorney to ensure your rights are protected. By doing so, you can have peace of mind knowing that your inherited IRA will be safeguarded from creditor claims and that your financial future is secure.
